Correlation Between ProShares Ultra and ProShares

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

By analyzing existing cross correlation between ProShares Ultra Euro and ProShares SP 500, you can compare the effects of market volatilities on ProShares Ultra and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares.

Diversification Opportunities for ProShares Ultra and ProShares

-0.86

Correlation Coefficient

ProShares Ultra  ProShares

Pay attention - limited upside

The 3 months correlation between ProShares and ProShares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Euro and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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 Euro are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares go up and down completely randomly.

Pair Corralation between ProShares Ultra and ProShares

Considering the 90-day investment horizon ProShares Ultra Euro is expected to under-perform the ProShares. In addition to that, ProShares Ultra is 1.34 times more volatile than ProShares SP 500. It trades about -0.13 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about 0.23 per unit of volatility. If you would invest  5,836  in ProShares SP 500 on September 1, 2024 and sell it today you would earn a total of  682.00  from holding ProShares SP 500 or generate 11.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ProShares Ultra Euro  vs.  ProShares SP 500

ProShares Ultra Euro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Euro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ProShares SP 500

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProShares Ultra and ProShares

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

The idea behind ProShares Ultra Euro and ProShares SP 500 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.