Correlation Between ProShares Ultra and Axonic Strategic

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

Diversification Opportunities for ProShares Ultra and Axonic Strategic

0.72

Correlation Coefficient

ProShares Ultra  Axonic Strategic

Poor diversification

The 3 months correlation between ProShares and Axonic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and Axonic Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonic Strategic Income 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 Axonic Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonic Strategic Income has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Axonic Strategic go up and down completely randomly.

Pair Corralation between ProShares Ultra and Axonic Strategic

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the Axonic Strategic. In addition to that, ProShares Ultra is 9.13 times more volatile than Axonic Strategic Income. It trades about -0.06 of its total potential returns per unit of risk. Axonic Strategic Income is currently generating about 0.09 per unit of volatility. If you would invest  873.00  in Axonic Strategic Income on February 14, 2025 and sell it today you would earn a total of  3.00  from holding Axonic Strategic Income or generate 0.34% return on investment over 90 days.

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

ProShares Ultra Euro  vs.  Axonic Strategic Income

ProShares Ultra Euro

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Euro are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Axonic Strategic Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axonic Strategic Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Axonic Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Axonic Strategic

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

The idea behind ProShares Ultra Euro and Axonic Strategic Income 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.