Correlation Between ProShares Ultra and Superior Uniform

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Superior Uniform 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 Superior Uniform 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 Superior Uniform Group, you can compare the effects of market volatilities on ProShares Ultra and Superior Uniform 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 Superior Uniform. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Superior Uniform.

Diversification Opportunities for ProShares Ultra and Superior Uniform

0.67

Correlation Coefficient

ProShares Ultra  Superior Uniform

Poor diversification

The 3 months correlation between ProShares and Superior is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Superior Uniform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Uniform 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 Superior Uniform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Uniform has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Superior Uniform go up and down completely randomly.

Pair Corralation between ProShares Ultra and Superior Uniform

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the Superior Uniform. In addition to that, ProShares Ultra is 1.95 times more volatile than Superior Uniform Group. It trades about -0.3 of its total potential returns per unit of risk. Superior Uniform Group is currently generating about 0.01 per unit of volatility. If you would invest  1,676  in Superior Uniform Group on January 24, 2024 and sell it today you would earn a total of  3.00  from holding Superior Uniform Group or generate 0.18% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  Superior Uniform Group

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.

Superior Uniform

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Uniform Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Superior Uniform exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Superior Uniform

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

The idea behind ProShares Ultra Semiconductors and Superior Uniform Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.