Correlation Between Advisors Inner and ProShares Ultra

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

By analyzing existing cross correlation between Advisors Inner Circle and ProShares Ultra QQQ, you can compare the effects of market volatilities on Advisors Inner and ProShares Ultra 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 Advisors Inner with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advisors Inner and ProShares Ultra.

Diversification Opportunities for Advisors Inner and ProShares Ultra

0.94

Correlation Coefficient

Advisors Inner  ProShares Ultra

Almost no diversification

The 3 months correlation between Advisors and ProShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Inner Circle and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and Advisors Inner 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 Advisors Inner Circle are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra QQQ has no effect on the direction of Advisors Inner i.e., Advisors Inner and ProShares Ultra go up and down completely randomly.

Pair Corralation between Advisors Inner and ProShares Ultra

Considering the 90-day investment horizon Advisors Inner is expected to generate 3.25 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Advisors Inner Circle is 3.74 times less risky than ProShares Ultra. It trades about 0.09 of its potential returns per unit of risk. ProShares Ultra QQQ is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,505  in ProShares Ultra QQQ on August 2, 2024 and sell it today you would earn a total of  1,845  from holding ProShares Ultra QQQ or generate 21.69% return on investment over 90 days.

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

Advisors Inner Circle  vs.  ProShares Ultra QQQ

Advisors Inner Circle

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advisors Inner Circle are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Advisors Inner is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ProShares Ultra QQQ

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra QQQ are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advisors Inner and ProShares Ultra

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

The idea behind Advisors Inner Circle and ProShares Ultra QQQ 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.