Correlation Between ProShares Ultra and Pacer Large

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

Diversification Opportunities for ProShares Ultra and Pacer Large

-0.9

Correlation Coefficient

ProShares Ultra  Pacer Large

Pay attention - limited upside

The 3 months correlation between ProShares and Pacer is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Pacer Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Large Cap 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 Pacer Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Large Cap has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Pacer Large go up and down completely randomly.

Pair Corralation between ProShares Ultra and Pacer Large

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Pacer Large. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra Euro is 1.24 times less risky than Pacer Large. The etf trades about -0.03 of its potential returns per unit of risk. The Pacer Large Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,949  in Pacer Large Cap on August 26, 2024 and sell it today you would earn a total of  1,417  from holding Pacer Large Cap or generate 72.7% 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.  Pacer Large Cap

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 weak performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pacer Large Cap

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Large Cap are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Pacer Large reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Pacer Large

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

The idea behind ProShares Ultra Euro and Pacer Large Cap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.