Correlation Between ProShares UltraPro and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and ProShares Short 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 UltraPro and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro Short and ProShares Short Russell2000, you can compare the effects of market volatilities on ProShares UltraPro and ProShares Short 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 UltraPro with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and ProShares Short.
Diversification Opportunities for ProShares UltraPro and ProShares Short
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and ProShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and ProShares Short Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Russ and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Russ has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and ProShares Short go up and down completely randomly.
Pair Corralation between ProShares UltraPro and ProShares Short
Given the investment horizon of 90 days ProShares UltraPro Short is expected to under-perform the ProShares Short. In addition to that, ProShares UltraPro is 1.55 times more volatile than ProShares Short Russell2000. It trades about -0.15 of its total potential returns per unit of risk. ProShares Short Russell2000 is currently generating about -0.22 per unit of volatility. If you would invest 1,896 in ProShares Short Russell2000 on August 31, 2024 and sell it today you would lose (152.00) from holding ProShares Short Russell2000 or give up 8.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro Short vs. ProShares Short Russell2000
Performance |
| Timeline |
| ProShares UltraPro Short |
| ProShares Short Russ |
ProShares UltraPro and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and ProShares Short
The main advantage of trading using opposite ProShares UltraPro and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.| ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro SP500 | ProShares UltraPro vs. Direxion Daily SP |
| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares Short MidCap400 | ProShares Short vs. ProShares UltraShort Russell2000 |
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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