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 Dow30 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

0.76

Correlation Coefficient

ProShares UltraPro  ProShares UltraPro

Poor diversification

The 3 months correlation between ProShares and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Dow30 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 Dow30 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 Dow30 is expected to generate 0.71 times more return on investment than ProShares UltraPro. However, ProShares UltraPro Dow30 is 1.41 times less risky than ProShares UltraPro. It trades about -0.01 of its potential returns per unit of risk. ProShares UltraPro Russell2000 is currently generating about -0.11 per unit of risk. If you would invest  9,454  in ProShares UltraPro Dow30 on December 28, 2024 and sell it today you would lose (370.00) from holding ProShares UltraPro Dow30 or give up 3.91% of portfolio value over 90 days.

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

ProShares UltraPro Dow30  vs.  ProShares UltraPro Russell2000

ProShares UltraPro Dow30

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraPro Dow30 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ProShares UltraPro is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ProShares UltraPro

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraPro Russell2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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 Dow30 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.