Correlation Between ProShares Ultra and Guggenheim Styleplus

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

By analyzing existing cross correlation between ProShares Ultra Semiconductors and Guggenheim Styleplus , you can compare the effects of market volatilities on ProShares Ultra and Guggenheim Styleplus 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 Guggenheim Styleplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Guggenheim Styleplus.

Diversification Opportunities for ProShares Ultra and Guggenheim Styleplus

0.95

Correlation Coefficient

ProShares Ultra  Guggenheim Styleplus

Almost no diversification

The 3 months correlation between ProShares and Guggenheim is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Guggenheim Styleplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Styleplus 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 Semiconductors are associated (or correlated) with Guggenheim Styleplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Styleplus has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Guggenheim Styleplus go up and down completely randomly.

Pair Corralation between ProShares Ultra and Guggenheim Styleplus

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 3.98 times more return on investment than Guggenheim Styleplus. However, ProShares Ultra is 3.98 times more volatile than Guggenheim Styleplus . It trades about 0.06 of its potential returns per unit of risk. Guggenheim Styleplus is currently generating about 0.03 per unit of risk. If you would invest  3,062  in ProShares Ultra Semiconductors on January 24, 2024 and sell it today you would earn a total of  4,656  from holding ProShares Ultra Semiconductors or generate 152.06% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  Guggenheim Styleplus

ProShares Ultra Semi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Guggenheim Styleplus

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Styleplus are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Guggenheim Styleplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Guggenheim Styleplus

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

The idea behind ProShares Ultra Semiconductors and Guggenheim Styleplus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.