Correlation Between ProShares UltraPro and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Alcoa Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ProShares UltraPro and Alcoa Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro Dow30 and Alcoa Corp, you can compare the effects of market volatilities on ProShares UltraPro and Alcoa Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ProShares UltraPro with a short position of Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Alcoa Corp.
Diversification Opportunities for ProShares UltraPro and Alcoa Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProShares and Alcoa is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Dow30 and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp and ProShares UltraPro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ProShares UltraPro Dow30 are associated (or correlated) with Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Alcoa Corp go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Alcoa Corp
Given the investment horizon of 90 days ProShares UltraPro Dow30 is expected to under-perform the Alcoa Corp. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraPro Dow30 is 1.2 times less risky than Alcoa Corp. The etf trades about -0.15 of its potential returns per unit of risk. The Alcoa Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,186 in Alcoa Corp on January 25, 2024 and sell it today you would earn a total of 420.00 from holding Alcoa Corp or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares UltraPro Dow30 vs. Alcoa Corp
Performance |
| Timeline |
| ProShares UltraPro Dow30 |
| Alcoa Corp |
ProShares UltraPro and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Alcoa Corp
The main advantage of trading using opposite ProShares UltraPro and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Alcoa Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro SP500 | ProShares UltraPro vs. ProShares UltraPro Russell2000 | ProShares UltraPro vs. Direxion Daily SP500 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Correlations Find global opportunities by holding instruments from different markets |