Correlation Between ProShares Ultra and Tidal Trust

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

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

Diversification Opportunities for ProShares Ultra and Tidal Trust

0.9

Correlation Coefficient

ProShares Ultra  Tidal Trust

Almost no diversification

The 3 months correlation between ProShares and Tidal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Yen are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Tidal Trust go up and down completely randomly.

Pair Corralation between ProShares Ultra and Tidal Trust

Considering the 90-day investment horizon ProShares Ultra is expected to generate 2.83 times less return on investment than Tidal Trust. But when comparing it to its historical volatility, ProShares Ultra Yen is 1.86 times less risky than Tidal Trust. It trades about 0.09 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,285  in Tidal Trust II on December 29, 2024 and sell it today you would earn a total of  377.00  from holding Tidal Trust II or generate 16.5% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Tidal Trust II

ProShares Ultra Yen

Risk-Adjusted Performance

Modest

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

Tidal Trust II

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Tidal Trust displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Tidal Trust

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

The idea behind ProShares Ultra Yen and Tidal Trust II 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.