Correlation Between Wave Life and ProShares Ultra

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

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

Diversification Opportunities for Wave Life and ProShares Ultra

-0.47

Correlation Coefficient

Wave Life  ProShares Ultra

Very good diversification

The 3 months correlation between Wave and ProShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Wave Life Sciences and ProShares Ultra Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Bloomberg and Wave Life 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 Wave Life Sciences 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 Bloomberg has no effect on the direction of Wave Life i.e., Wave Life and ProShares Ultra go up and down completely randomly.

Pair Corralation between Wave Life and ProShares Ultra

Considering the 90-day investment horizon Wave Life is expected to generate 1.61 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Wave Life Sciences is 1.01 times less risky than ProShares Ultra. It trades about 0.07 of its potential returns per unit of risk. ProShares Ultra Bloomberg is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,335  in ProShares Ultra Bloomberg on February 4, 2024 and sell it today you would earn a total of  129.00  from holding ProShares Ultra Bloomberg or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wave Life Sciences  vs.  ProShares Ultra Bloomberg

Wave Life Sciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wave Life Sciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Wave Life exhibited solid returns over the last few months and may actually be approaching a breakup point.

ProShares Ultra Bloomberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's forward indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with Wave Life and ProShares Ultra

The main advantage of trading using opposite Wave Life and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Life 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 Wave Life Sciences and ProShares Ultra Bloomberg 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 Commodity Directory module to find actively traded commodities issued by global exchanges.