Correlation Between ProShares Ultra and MAX S

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and MAX S 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 MAX S 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 MAX S P, you can compare the effects of market volatilities on ProShares Ultra and MAX S 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 MAX S. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and MAX S.

Diversification Opportunities for ProShares Ultra and MAX S

0.99

Correlation Coefficient

ProShares Ultra  MAX S

No risk reduction

The 3 months correlation between ProShares and MAX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and MAX S P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAX S P 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 MAX S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAX S P has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and MAX S go up and down completely randomly.

Pair Corralation between ProShares Ultra and MAX S

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to generate 0.7 times more return on investment than MAX S. However, ProShares Ultra QQQ is 1.43 times less risky than MAX S. It trades about -0.08 of its potential returns per unit of risk. MAX S P is currently generating about -0.08 per unit of risk. If you would invest  11,010  in ProShares Ultra QQQ on December 28, 2024 and sell it today you would lose (1,622) from holding ProShares Ultra QQQ or give up 14.73% of portfolio value over 90 days.

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

ProShares Ultra QQQ  vs.  MAX S P

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.

MAX S P

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAX S P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with ProShares Ultra and MAX S

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

The idea behind ProShares Ultra QQQ and MAX S P 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.