Correlation Between ProShares Ultra and Dimensional ETF

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

Diversification Opportunities for ProShares Ultra and Dimensional ETF

0.51

Correlation Coefficient

ProShares Ultra  Dimensional ETF

Very weak diversification

The 3 months correlation between ProShares and Dimensional is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Dimensional ETF go up and down completely randomly.

Pair Corralation between ProShares Ultra and Dimensional ETF

Considering the 90-day investment horizon ProShares Ultra Oil is expected to under-perform the Dimensional ETF. In addition to that, ProShares Ultra is 2.46 times more volatile than Dimensional ETF Trust. It trades about -0.15 of its total potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.03 per unit of volatility. If you would invest  2,646  in Dimensional ETF Trust on June 9, 2024 and sell it today you would earn a total of  15.00  from holding Dimensional ETF Trust or generate 0.57% return on investment over 90 days.

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

ProShares Ultra Oil  vs.  Dimensional ETF Trust

ProShares Ultra Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Dimensional ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Dimensional ETF is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares Ultra and Dimensional ETF

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

The idea behind ProShares Ultra Oil and Dimensional ETF Trust 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.