Correlation Between BlackRock Health and ProShares Ultra

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

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

Diversification Opportunities for BlackRock Health and ProShares Ultra

-0.2

Correlation Coefficient

BlackRock Health  ProShares Ultra

Good diversification

The 3 months correlation between BlackRock and ProShares is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and ProShares Ultra Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Utilities and BlackRock Health 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 BlackRock Health 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 Utilities has no effect on the direction of BlackRock Health i.e., BlackRock Health and ProShares Ultra go up and down completely randomly.

Pair Corralation between BlackRock Health and ProShares Ultra

Considering the 90-day investment horizon BlackRock Health is expected to generate 28.71 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, BlackRock Health Sciences is 3.48 times less risky than ProShares Ultra. It trades about 0.04 of its potential returns per unit of risk. ProShares Ultra Utilities is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  5,884  in ProShares Ultra Utilities on March 2, 2024 and sell it today you would earn a total of  657.00  from holding ProShares Ultra Utilities or generate 11.17% return on investment over 90 days.

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

BlackRock Health Sciences  vs.  ProShares Ultra Utilities

BlackRock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Ultra Utilities

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Utilities are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares Ultra showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock Health and ProShares Ultra

The main advantage of trading using opposite BlackRock Health and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Health 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 BlackRock Health Sciences and ProShares Ultra Utilities 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.