Correlation Between ProShares Ultra and Proshares

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

Diversification Opportunities for ProShares Ultra and Proshares

0.49

Correlation Coefficient

ProShares Ultra  Proshares

Very weak diversification

The 3 months correlation between ProShares and Proshares is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Proshares SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proshares SP Global 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 Proshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proshares SP Global has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Proshares go up and down completely randomly.

Pair Corralation between ProShares Ultra and Proshares

Considering the 90-day investment horizon ProShares Ultra Yen is expected to generate 0.87 times more return on investment than Proshares. However, ProShares Ultra Yen is 1.15 times less risky than Proshares. It trades about 0.14 of its potential returns per unit of risk. Proshares SP Global is currently generating about 0.06 per unit of risk. If you would invest  2,014  in ProShares Ultra Yen on December 27, 2024 and sell it today you would earn a total of  182.00  from holding ProShares Ultra Yen or generate 9.04% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Proshares SP Global

ProShares Ultra Yen

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Yen are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Proshares SP Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Proshares SP Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Proshares is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Proshares

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

The idea behind ProShares Ultra Yen and Proshares SP Global 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.