Correlation Between ProShares Ultra and BNY Mellon

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

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

Diversification Opportunities for ProShares Ultra and BNY Mellon

-0.84

Correlation Coefficient

ProShares Ultra  BNY Mellon

Pay attention - limited upside

The 3 months correlation between ProShares and BNY is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and BNY Mellon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Large 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 Euro are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Large has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and BNY Mellon go up and down completely randomly.

Pair Corralation between ProShares Ultra and BNY Mellon

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the BNY Mellon. In addition to that, ProShares Ultra is 1.3 times more volatile than BNY Mellon Large. It trades about -0.13 of its total potential returns per unit of risk. BNY Mellon Large is currently generating about 0.16 per unit of volatility. If you would invest  10,574  in BNY Mellon Large on August 29, 2024 and sell it today you would earn a total of  872.00  from holding BNY Mellon Large or generate 8.25% return on investment over 90 days.

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

ProShares Ultra Euro  vs.  BNY Mellon Large

ProShares Ultra Euro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Euro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

BNY Mellon Large

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Large are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, BNY Mellon may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and BNY Mellon

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

The idea behind ProShares Ultra Euro and BNY Mellon Large 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.