Correlation Between ProShares Ultra and SP Funds

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

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

Diversification Opportunities for ProShares Ultra and SP Funds

-0.81

Correlation Coefficient

ProShares Ultra  SP Funds

Pay attention - limited upside

The 3 months correlation between ProShares and SPSK is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and SP Funds Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Funds Dow 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 Semiconductors are associated (or correlated) with SP Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Funds Dow has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and SP Funds go up and down completely randomly.

Pair Corralation between ProShares Ultra and SP Funds

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to under-perform the SP Funds. In addition to that, ProShares Ultra is 18.67 times more volatile than SP Funds Dow. It trades about -0.09 of its total potential returns per unit of risk. SP Funds Dow is currently generating about 0.08 per unit of volatility. If you would invest  1,762  in SP Funds Dow on December 29, 2024 and sell it today you would earn a total of  30.00  from holding SP Funds Dow or generate 1.7% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  SP Funds Dow

ProShares Ultra Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

SP Funds Dow

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SP Funds Dow are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SP Funds is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Ultra and SP Funds

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

The idea behind ProShares Ultra Semiconductors and SP Funds Dow 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.