Correlation Between ProShares Ultra and JPMorgan BetaBuilders

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

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

Diversification Opportunities for ProShares Ultra and JPMorgan BetaBuilders

-0.66

Correlation Coefficient

ProShares Ultra  JPMorgan BetaBuilders

Excellent diversification

The 3 months correlation between ProShares and JPMorgan is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and JPMorgan BetaBuilders Aggregat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 Oil are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between ProShares Ultra and JPMorgan BetaBuilders

Considering the 90-day investment horizon ProShares Ultra Oil is expected to generate 6.37 times more return on investment than JPMorgan BetaBuilders. However, ProShares Ultra is 6.37 times more volatile than JPMorgan BetaBuilders Aggregate. It trades about 0.23 of its potential returns per unit of risk. JPMorgan BetaBuilders Aggregate is currently generating about 0.06 per unit of risk. If you would invest  3,943  in ProShares Ultra Oil on August 29, 2024 and sell it today you would earn a total of  487.00  from holding ProShares Ultra Oil or generate 12.35% return on investment over 90 days.

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

ProShares Ultra Oil  vs.  JPMorgan BetaBuilders Aggregat

ProShares Ultra Oil

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Oil are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in December 2024.

JPMorgan BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan BetaBuilders Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, JPMorgan BetaBuilders is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Ultra and JPMorgan BetaBuilders

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

The idea behind ProShares Ultra Oil and JPMorgan BetaBuilders Aggregate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.