Correlation Between Volatility Shares and ProShares Ultra

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

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

Diversification Opportunities for Volatility Shares and ProShares Ultra

-0.39

Correlation Coefficient

Volatility Shares  ProShares Ultra

Very good diversification

The 3 months correlation between Volatility and ProShares is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ProShares Ultra Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Health and Volatility Shares 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 Volatility Shares Trust 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 Health has no effect on the direction of Volatility Shares i.e., Volatility Shares and ProShares Ultra go up and down completely randomly.

Pair Corralation between Volatility Shares and ProShares Ultra

Given the investment horizon of 90 days Volatility Shares Trust is expected to under-perform the ProShares Ultra. In addition to that, Volatility Shares is 3.95 times more volatile than ProShares Ultra Health. It trades about -0.07 of its total potential returns per unit of risk. ProShares Ultra Health is currently generating about 0.11 per unit of volatility. If you would invest  4,379  in ProShares Ultra Health on December 30, 2024 and sell it today you would earn a total of  429.00  from holding ProShares Ultra Health or generate 9.8% return on investment over 90 days.

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

Volatility Shares Trust  vs.  ProShares Ultra Health

Volatility Shares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volatility Shares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ProShares Ultra Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Volatility Shares and ProShares Ultra

The main advantage of trading using opposite Volatility Shares and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares 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 Volatility Shares Trust and ProShares Ultra Health 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.