Correlation Between ProShares UltraPro and ProShares UltraPro

Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro 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 UltraPro 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 UltraPro Short and ProShares UltraPro Russell2000, you can compare the effects of market volatilities on ProShares UltraPro 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 UltraPro with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and ProShares UltraPro.

Diversification Opportunities for ProShares UltraPro and ProShares UltraPro

-0.99

Correlation Coefficient

ProShares UltraPro  ProShares UltraPro

Pay attention - limited upside

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 UltraPro Short and ProShares UltraPro Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro 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 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 has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and ProShares UltraPro go up and down completely randomly.

Pair Corralation between ProShares UltraPro and ProShares UltraPro

Given the investment horizon of 90 days ProShares UltraPro Short is expected to under-perform the ProShares UltraPro. In addition to that, ProShares UltraPro is 1.01 times more volatile than ProShares UltraPro Russell2000. It trades about -0.27 of its total potential returns per unit of risk. ProShares UltraPro Russell2000 is currently generating about 0.28 per unit of volatility. If you would invest  5,065  in ProShares UltraPro Russell2000 on September 4, 2024 and sell it today you would earn a total of  1,494  from holding ProShares UltraPro Russell2000 or generate 29.5% return on investment over 90 days.

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

ProShares UltraPro Short  vs.  ProShares UltraPro Russell2000

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 fragile performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ProShares UltraPro

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro Russell2000 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ProShares UltraPro showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares UltraPro and ProShares UltraPro

The main advantage of trading using opposite ProShares UltraPro and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro 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 UltraPro Short and ProShares UltraPro Russell2000 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.