Correlation Between ProShares Trust and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and ProShares UltraShort 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 Trust and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and ProShares UltraShort Dow30, you can compare the effects of market volatilities on ProShares Trust and ProShares UltraShort 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 Trust with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and ProShares UltraShort.
Diversification Opportunities for ProShares Trust and ProShares UltraShort
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and ProShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and ProShares UltraShort Dow30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and ProShares Trust 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 Trust are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of ProShares Trust i.e., ProShares Trust and ProShares UltraShort go up and down completely randomly.
Pair Corralation between ProShares Trust and ProShares UltraShort
Given the investment horizon of 90 days ProShares Trust is expected to under-perform the ProShares UltraShort. In addition to that, ProShares Trust is 2.38 times more volatile than ProShares UltraShort Dow30. It trades about -0.1 of its total potential returns per unit of risk. ProShares UltraShort Dow30 is currently generating about -0.06 per unit of volatility. If you would invest 3,869 in ProShares UltraShort Dow30 on August 29, 2024 and sell it today you would lose (1,399) from holding ProShares UltraShort Dow30 or give up 36.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. ProShares UltraShort Dow30
Performance |
| Timeline |
| ProShares Trust |
| ProShares UltraShort |
ProShares Trust and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and ProShares UltraShort
The main advantage of trading using opposite ProShares Trust and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.| ProShares Trust vs. AXS TSLA Bear | ProShares Trust vs. Tuttle Capital Short | ProShares Trust vs. ProShares Bitcoin Strategy | ProShares Trust vs. ProShares UltraShort Bloomberg |
| ProShares UltraShort vs. AXS TSLA Bear | ProShares UltraShort vs. ProShares Trust | ProShares UltraShort vs. ProShares UltraShort Bloomberg |
Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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