Correlation Between ProShares UltraPro and IShares SP

Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and IShares SP 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 IShares SP 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 iShares SP 500, you can compare the effects of market volatilities on ProShares UltraPro and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and IShares SP.

Diversification Opportunities for ProShares UltraPro and IShares SP

0.99

Correlation Coefficient

ProShares UltraPro  IShares SP

No risk reduction

The 3 months correlation between ProShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and IShares SP go up and down completely randomly.

Pair Corralation between ProShares UltraPro and IShares SP

Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to under-perform the IShares SP. In addition to that, ProShares UltraPro is 2.05 times more volatile than iShares SP 500. It trades about -0.1 of its total potential returns per unit of risk. iShares SP 500 is currently generating about -0.1 per unit of volatility. If you would invest  10,230  in iShares SP 500 on December 30, 2024 and sell it today you would lose (975.00) from holding iShares SP 500 or give up 9.53% of portfolio value over 90 days.

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

ProShares UltraPro SP500  vs.  iShares SP 500

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.

iShares SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with ProShares UltraPro and IShares SP

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

The idea behind ProShares UltraPro SP500 and iShares 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.