Correlation Between SL Green and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both SL Green and ProShares Ultra 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 SL Green and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Green Realty and ProShares Ultra QQQ, you can compare the effects of market volatilities on SL Green and ProShares Ultra 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 SL Green with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and ProShares Ultra.

Diversification Opportunities for SL Green and ProShares Ultra

0.29

Correlation Coefficient

SL Green  ProShares Ultra

Modest diversification

The 3 months correlation between SLG and ProShares is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and SL Green 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 SL Green Realty are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra QQQ has no effect on the direction of SL Green i.e., SL Green and ProShares Ultra go up and down completely randomly.

Pair Corralation between SL Green and ProShares Ultra

Considering the 90-day investment horizon SL Green is expected to generate 1.28 times less return on investment than ProShares Ultra. In addition to that, SL Green is 1.33 times more volatile than ProShares Ultra QQQ. It trades about 0.04 of its total potential returns per unit of risk. ProShares Ultra QQQ is currently generating about 0.07 per unit of volatility. If you would invest  8,598  in ProShares Ultra QQQ on February 29, 2024 and sell it today you would earn a total of  643.00  from holding ProShares Ultra QQQ or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

SL Green Realty  vs.  ProShares Ultra QQQ

SL Green Realty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, SL Green may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ProShares Ultra QQQ

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra QQQ are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with SL Green and ProShares Ultra

The main advantage of trading using opposite SL Green and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.

The idea behind SL Green Realty and ProShares Ultra QQQ pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.