Correlation Between ProShares Ultra and Freedom 100

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Freedom 100 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 Freedom 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Ultra Technology and Freedom 100 Emerging, you can compare the effects of market volatilities on ProShares Ultra and Freedom 100 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 Freedom 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Freedom 100.

Diversification Opportunities for ProShares Ultra and Freedom 100

0.05

Correlation Coefficient

ProShares Ultra  Freedom 100

Significant diversification

The 3 months correlation between ProShares and Freedom is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Freedom 100 Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom 100 Emerging 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 Technology are associated (or correlated) with Freedom 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom 100 Emerging has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Freedom 100 go up and down completely randomly.

Pair Corralation between ProShares Ultra and Freedom 100

Considering the 90-day investment horizon ProShares Ultra Technology is expected to under-perform the Freedom 100. In addition to that, ProShares Ultra is 2.71 times more volatile than Freedom 100 Emerging. It trades about -0.11 of its total potential returns per unit of risk. Freedom 100 Emerging is currently generating about 0.02 per unit of volatility. If you would invest  3,403  in Freedom 100 Emerging on December 4, 2024 and sell it today you would earn a total of  40.00  from holding Freedom 100 Emerging or generate 1.18% return on investment over 90 days.

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

ProShares Ultra Technology  vs.  Freedom 100 Emerging

ProShares Ultra Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Technology 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 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.

Freedom 100 Emerging

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom 100 Emerging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Freedom 100 is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Freedom 100

The main advantage of trading using opposite ProShares Ultra and Freedom 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Freedom 100 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 Freedom 100 will offset losses from the drop in Freedom 100's long position.

The idea behind ProShares Ultra Technology and Freedom 100 Emerging 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.