Correlation Between ProShares UltraShort and United States

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

By analyzing existing cross correlation between ProShares UltraShort Bloomberg and United States 12, you can compare the effects of market volatilities on ProShares UltraShort and United States 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 UltraShort with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and United States.

Diversification Opportunities for ProShares UltraShort and United States

-0.96

Correlation Coefficient

ProShares UltraShort  United States

Pay attention - limited upside

The 3 months correlation between ProShares and United is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 and ProShares UltraShort 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 UltraShort Bloomberg are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and United States go up and down completely randomly.

Pair Corralation between ProShares UltraShort and United States

Given the investment horizon of 90 days ProShares UltraShort Bloomberg is expected to under-perform the United States. In addition to that, ProShares UltraShort is 3.01 times more volatile than United States 12. It trades about -0.13 of its total potential returns per unit of risk. United States 12 is currently generating about 0.16 per unit of volatility. If you would invest  777.00  in United States 12 on December 26, 2024 and sell it today you would earn a total of  216.00  from holding United States 12 or generate 27.8% return on investment over 90 days.

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

ProShares UltraShort Bloomberg  vs.  United States 12

ProShares UltraShort

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's essential 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.

United States 12

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United States 12 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, United States disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares UltraShort and United States

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

The idea behind ProShares UltraShort Bloomberg and United States 12 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.