Correlation Between ProShares Trust and PGIM Ultra

Can any of the company-specific risk be diversified away by investing in both ProShares Trust and PGIM 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 Trust and PGIM Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Trust and PGIM Ultra Short, you can compare the effects of market volatilities on ProShares Trust and PGIM 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 Trust with a short position of PGIM Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and PGIM Ultra.

Diversification Opportunities for ProShares Trust and PGIM Ultra

-0.92

Correlation Coefficient

ProShares Trust  PGIM Ultra

Pay attention - limited upside

The 3 months correlation between ProShares and PGIM is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and PGIM Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Ultra Short and ProShares Trust 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 Trust are associated (or correlated) with PGIM Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Ultra Short has no effect on the direction of ProShares Trust i.e., ProShares Trust and PGIM Ultra go up and down completely randomly.

Pair Corralation between ProShares Trust and PGIM Ultra

Given the investment horizon of 90 days ProShares Trust is expected to generate 127.12 times more return on investment than PGIM Ultra. However, ProShares Trust is 127.12 times more volatile than PGIM Ultra Short. It trades about 0.01 of its potential returns per unit of risk. PGIM Ultra Short is currently generating about 0.7 per unit of risk. If you would invest  2,280  in ProShares Trust on October 6, 2024 and sell it today you would lose (8.00) from holding ProShares Trust or give up 0.35% of portfolio value over 90 days.

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

ProShares Trust   vs.  PGIM Ultra Short

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

PGIM Ultra Short

Risk-Adjusted Performance

56 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PGIM Ultra Short are ranked lower than 56 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, PGIM Ultra is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares Trust and PGIM Ultra

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

The idea behind ProShares Trust and PGIM Ultra Short 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.