Correlation Between SPACE and ProShares Ultra

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

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

Diversification Opportunities for SPACE and ProShares Ultra

0.56

Correlation Coefficient

SPACE  ProShares Ultra

Very weak diversification

The 3 months correlation between SPACE and ProShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and ProShares Ultra Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Semi and SPACE 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 SPACE 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 Semi has no effect on the direction of SPACE i.e., SPACE and ProShares Ultra go up and down completely randomly.

Pair Corralation between SPACE and ProShares Ultra

Assuming the 90 days horizon SPACE is expected to under-perform the ProShares Ultra. In addition to that, SPACE is 1.0 times more volatile than ProShares Ultra Semiconductors. It trades about -0.12 of its total potential returns per unit of risk. ProShares Ultra Semiconductors is currently generating about -0.09 per unit of volatility. If you would invest  6,736  in ProShares Ultra Semiconductors on December 29, 2024 and sell it today you would lose (2,653) from holding ProShares Ultra Semiconductors or give up 39.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

SPACE  vs.  ProShares Ultra Semiconductors

SPACE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPACE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for SPACE shareholders.

ProShares Ultra Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with SPACE and ProShares Ultra

The main advantage of trading using opposite SPACE and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE and ProShares Ultra Semiconductors 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.