Correlation Between VanEck Oil and ProShares UltraPro

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

By analyzing existing cross correlation between VanEck Oil Services and ProShares UltraPro Short, you can compare the effects of market volatilities on VanEck Oil and ProShares UltraPro 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 VanEck Oil with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and ProShares UltraPro.

Diversification Opportunities for VanEck Oil and ProShares UltraPro

-0.74

Correlation Coefficient

VanEck Oil  ProShares UltraPro

Pay attention - limited upside

The 3 months correlation between VanEck and ProShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and VanEck Oil 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 VanEck Oil Services are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of VanEck Oil i.e., VanEck Oil and ProShares UltraPro go up and down completely randomly.

Pair Corralation between VanEck Oil and ProShares UltraPro

Considering the 90-day investment horizon VanEck Oil Services is expected to under-perform the ProShares UltraPro. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Oil Services is 1.78 times less risky than ProShares UltraPro. The etf trades about -0.3 of its potential returns per unit of risk. The ProShares UltraPro Short is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,315  in ProShares UltraPro Short on February 2, 2024 and sell it today you would earn a total of  406.00  from holding ProShares UltraPro Short or generate 12.25% return on investment over 90 days.

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

VanEck Oil Services  vs.  ProShares UltraPro Short

VanEck Oil Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, VanEck Oil may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ProShares UltraPro Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraPro Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ProShares UltraPro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VanEck Oil and ProShares UltraPro

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

The idea behind VanEck Oil Services and ProShares UltraPro Short 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.