Correlation Between ProShares UltraPro and Tidal ETF

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

By analyzing existing cross correlation between ProShares UltraPro SP500 and Tidal ETF Trust, you can compare the effects of market volatilities on ProShares UltraPro and Tidal ETF 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 Tidal ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Tidal ETF.

Diversification Opportunities for ProShares UltraPro and Tidal ETF

0.88

Correlation Coefficient

ProShares UltraPro  Tidal ETF

Very poor diversification

The 3 months correlation between ProShares and Tidal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust 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 SP500 are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Tidal ETF go up and down completely randomly.

Pair Corralation between ProShares UltraPro and Tidal ETF

Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to under-perform the Tidal ETF. In addition to that, ProShares UltraPro is 3.56 times more volatile than Tidal ETF Trust. It trades about -0.08 of its total potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.02 per unit of volatility. If you would invest  2,367  in Tidal ETF Trust on December 20, 2024 and sell it today you would lose (32.00) from holding Tidal ETF Trust or give up 1.35% of portfolio value over 90 days.

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

ProShares UltraPro SP500  vs.  Tidal ETF Trust

ProShares UltraPro SP500

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraPro SP500 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 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.

Tidal ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tidal ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Tidal ETF is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProShares UltraPro and Tidal ETF

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

The idea behind ProShares UltraPro SP500 and Tidal ETF Trust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.