Correlation Between ProShares Short and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both ProShares Short and ProShares UltraPro 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 Short and ProShares UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short Real and ProShares UltraPro MidCap400, you can compare the effects of market volatilities on ProShares Short and ProShares UltraPro 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 Short with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and ProShares UltraPro.
Diversification Opportunities for ProShares Short and ProShares UltraPro
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between ProShares and ProShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Real and ProShares UltraPro MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro and ProShares Short 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 Short Real are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro has no effect on the direction of ProShares Short i.e., ProShares Short and ProShares UltraPro go up and down completely randomly.
Pair Corralation between ProShares Short and ProShares UltraPro
Considering the 90-day investment horizon ProShares Short Real is expected to under-perform the ProShares UltraPro. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short Real is 3.28 times less risky than ProShares UltraPro. The etf trades about -0.2 of its potential returns per unit of risk. The ProShares UltraPro MidCap400 is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,687 in ProShares UltraPro MidCap400 on September 2, 2024 and sell it today you would earn a total of 725.00 from holding ProShares UltraPro MidCap400 or generate 26.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short Real vs. ProShares UltraPro MidCap400
Performance |
| Timeline |
| ProShares Short Real |
| ProShares UltraPro |
ProShares Short and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and ProShares UltraPro
The main advantage of trading using opposite ProShares Short and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.| ProShares Short vs. ProShares Short Financials | ProShares Short vs. Direxion Daily Real | ProShares Short vs. ProShares Short High | ProShares Short vs. ProShares Short FTSE |
| ProShares UltraPro vs. ProShares UltraPro Russell2000 | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. Direxion Daily Mid | ProShares UltraPro vs. ProShares Ultra SmallCap600 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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