Correlation Between ProShares Ultra and ProShares UltraPro

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and ProShares UltraPro 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 ProShares UltraPro 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 ProShares UltraPro SP500, you can compare the effects of market volatilities on ProShares Ultra and ProShares UltraPro 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 ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares UltraPro.

Diversification Opportunities for ProShares Ultra and ProShares UltraPro

0.99

Correlation Coefficient

ProShares Ultra  ProShares UltraPro

No risk reduction

The 3 months correlation between ProShares and ProShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and ProShares UltraPro SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro SP500 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 ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro SP500 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares UltraPro go up and down completely randomly.

Pair Corralation between ProShares Ultra and ProShares UltraPro

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to under-perform the ProShares UltraPro. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Ultra QQQ is 1.08 times less risky than ProShares UltraPro. The etf trades about -0.11 of its potential returns per unit of risk. The ProShares UltraPro SP500 is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8,945  in ProShares UltraPro SP500 on December 30, 2024 and sell it today you would lose (1,681) from holding ProShares UltraPro SP500 or give up 18.79% 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.  ProShares UltraPro SP500

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.

ProShares UltraPro SP500

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraPro SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with ProShares Ultra and ProShares UltraPro

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

The idea behind ProShares Ultra QQQ and ProShares UltraPro SP500 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.