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Report 4

In this report I take a look at ProShares Ultra short S&P 500 (SDS), Spyder (SPY), and ProShares Ultra S&P 500 (SSO). Pro Shares Ultra short is a fund that puts an inverse x2 on the S&P 500. ProShares Ultra is a fund that correlates towards the S&P 500 x2 daily. The monthly mean and std for SOS is 0.0167107 and 0.07061115. SDS calculated at 0.0007129 and 0.000711238.

Using a mix of each of these shares we can calculate a beta of 1.5 which can result in a monthly return of 0.106112. Assuming a much less return at 1%, the beta calculates out to .323. This means the volatility of the portfolio is rather low and not estimating a significant monthly change.

Assuming the portfolio has a low volatility, if still proves to show a monthly return of 1% which in long term growth, can be quite substantial. This is almost a worse case scenario and has a high chance of being closer to the much higher volatility to each of these stocks being doubled compared to the S&P 500. With a higher volatility the expected return also increases anywhere from 1-10% monthly.

Diversity is important so I also compared these with Berkshire Hathaway-A. (BRK-A) Finding my calculations of alpha and beta, this shows a lower volatility and lower alpha as well. My calculations seemed to not correlate so it is to my belief that my calculations were not correctly formatted. I decided to look at the indicated beta of BRK via Yahoo Finance. The calculated beta for BRKA was .93 which shows its volatile with the market. This is however much lower compared to SSO and SDS, which makes me recommend that Buffet may not be the best bet for higher long term growth mainly due to the lower beta compared to SDS and SSO.

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