Correlation Between ProShares UltraPro and AXS 2X

Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and AXS 2X 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 AXS 2X 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 AXS 2X Innovation, you can compare the effects of market volatilities on ProShares UltraPro and AXS 2X 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 AXS 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and AXS 2X.

Diversification Opportunities for ProShares UltraPro and AXS 2X

0.97

Correlation Coefficient

ProShares UltraPro  AXS 2X

Almost no diversification

The 3 months correlation between ProShares and AXS is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and AXS 2X Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 2X Innovation 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 AXS 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 2X Innovation has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and AXS 2X go up and down completely randomly.

Pair Corralation between ProShares UltraPro and AXS 2X

Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 0.52 times more return on investment than AXS 2X. However, ProShares UltraPro SP500 is 1.94 times less risky than AXS 2X. It trades about -0.1 of its potential returns per unit of risk. AXS 2X Innovation is currently generating about -0.08 per unit of risk. If you would invest  8,945  in ProShares UltraPro SP500 on December 28, 2024 and sell it today you would lose (1,681) from holding ProShares UltraPro SP500 or give up 18.79% 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.  AXS 2X Innovation

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.

AXS 2X Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days AXS 2X Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Pair Trading with ProShares UltraPro and AXS 2X

The main advantage of trading using opposite ProShares UltraPro and AXS 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, AXS 2X 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 AXS 2X will offset losses from the drop in AXS 2X's long position.

The idea behind ProShares UltraPro SP500 and AXS 2X Innovation 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.