Correlation Between ProShares Ultra and DGAZ

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

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

Diversification Opportunities for ProShares Ultra and DGAZ

0.0

Correlation Coefficient

ProShares Ultra  DGAZ

Pay attention - limited upside

The 3 months correlation between ProShares and DGAZ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and DGAZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGAZ and ProShares Ultra 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 Ultra QQQ are associated (or correlated) with DGAZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGAZ has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and DGAZ go up and down completely randomly.

Pair Corralation between ProShares Ultra and DGAZ

If you would invest (100.00) in DGAZ on January 29, 2024 and sell it today you would earn a total of  100.00  from holding DGAZ or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ProShares Ultra QQQ  vs.  DGAZ

ProShares Ultra QQQ

Risk-Adjusted Performance

0 of 100

Very Weak

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

DGAZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGAZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DGAZ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and DGAZ

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

The idea behind ProShares Ultra QQQ and DGAZ 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.