Correlation Between ProShares Ultra and IShares MSCI

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

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

Diversification Opportunities for ProShares Ultra and IShares MSCI

0.77

Correlation Coefficient

ProShares Ultra  IShares MSCI

Poor diversification

The 3 months correlation between ProShares and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and iShares MSCI Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Indonesia and ProShares Ultra 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 Ultra QQQ are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Indonesia has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and IShares MSCI go up and down completely randomly.

Pair Corralation between ProShares Ultra and IShares MSCI

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to under-perform the IShares MSCI. In addition to that, ProShares Ultra is 1.6 times more volatile than iShares MSCI Indonesia. It trades about -0.11 of its total potential returns per unit of risk. iShares MSCI Indonesia is currently generating about -0.11 per unit of volatility. If you would invest  1,853  in iShares MSCI Indonesia on December 29, 2024 and sell it today you would lose (216.00) from holding iShares MSCI Indonesia or give up 11.66% of portfolio value over 90 days.

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

ProShares Ultra QQQ  vs.  iShares MSCI Indonesia

ProShares Ultra QQQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra QQQ 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 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.

iShares MSCI Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with ProShares Ultra and IShares MSCI

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

The idea behind ProShares Ultra QQQ and iShares MSCI Indonesia 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.