Correlation Between ProShares UltraPro and ProShares Decline

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

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

Diversification Opportunities for ProShares UltraPro and ProShares Decline

0.73

Correlation Coefficient

ProShares UltraPro  ProShares Decline

Poor diversification

The 3 months correlation between ProShares and ProShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and ProShares Decline of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Decline and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with ProShares Decline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Decline has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and ProShares Decline go up and down completely randomly.

Pair Corralation between ProShares UltraPro and ProShares Decline

Given the investment horizon of 90 days ProShares UltraPro Short is expected to under-perform the ProShares Decline. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraPro Short is 1.15 times less risky than ProShares Decline. The etf trades about -0.33 of its potential returns per unit of risk. The ProShares Decline of is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  1,328  in ProShares Decline of on September 16, 2024 and sell it today you would lose (60.00) from holding ProShares Decline of or give up 4.52% of portfolio value over 90 days.

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

ProShares UltraPro Short  vs.  ProShares Decline of

ProShares UltraPro Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraPro Short 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

ProShares Decline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Decline of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ProShares Decline is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares UltraPro and ProShares Decline

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

The idea behind ProShares UltraPro Short and ProShares Decline of 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.