Correlation Between Merck and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and ProShares Ultra Technology, you can compare the effects of market volatilities on Merck 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 Merck with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and ProShares Ultra.
Diversification Opportunities for Merck and ProShares Ultra
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merck and ProShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and ProShares Ultra Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Tech and Merck 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 Merck Company 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 Tech has no effect on the direction of Merck i.e., Merck and ProShares Ultra go up and down completely randomly.
Pair Corralation between Merck and ProShares Ultra
Considering the 90-day investment horizon Merck is expected to generate 4.5 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Merck Company is 1.13 times less risky than ProShares Ultra. It trades about 0.05 of its potential returns per unit of risk. ProShares Ultra Technology is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,784 in ProShares Ultra Technology on June 13, 2025 and sell it today you would earn a total of 1,446 from holding ProShares Ultra Technology or generate 21.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. ProShares Ultra Technology
Performance |
| Timeline |
| Merck Company |
| ProShares Ultra Tech |
Merck and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and ProShares Ultra
The main advantage of trading using opposite Merck and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.| Merck vs. CytomX Therapeutics | Merck vs. Assembly Biosciences | Merck vs. Spero Therapeutics | Merck vs. Alkermes Plc |
| ProShares Ultra vs. ProShares Ultra Health | ProShares Ultra vs. ProShares Ultra Semiconductors | ProShares Ultra vs. ProShares Ultra Industrials | ProShares Ultra vs. ProShares Ultra Consumer |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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