Correlation Between ProShares and ProShares Ultra

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Can any of the company-specific risk be diversified away by investing in both ProShares 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 ProShares and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares and ProShares Ultra SP500, you can compare the effects of market volatilities on ProShares 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 ProShares with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and ProShares Ultra.

Diversification Opportunities for ProShares and ProShares Ultra

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between ProShares and ProShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares and ProShares Ultra SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra SP500 and ProShares 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 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 SP500 has no effect on the direction of ProShares i.e., ProShares and ProShares Ultra go up and down completely randomly.

Pair Corralation between ProShares and ProShares Ultra

If you would invest  6,384  in ProShares Ultra SP500 on December 29, 2023 and sell it today you would earn a total of  1,374  from holding ProShares Ultra SP500 or generate 21.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

ProShares   vs.  ProShares Ultra SP500

 Performance 
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ProShares 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days ProShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ProShares is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
ProShares Ultra SP500 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra SP500 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

ProShares and ProShares Ultra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares and ProShares Ultra

The main advantage of trading using opposite ProShares and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares 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 ProShares and ProShares Ultra SP500 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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