Correlation Between SPDR SP and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both SPDR SP and ProShares Ultra 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 SPDR SP and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and ProShares Ultra QQQ, you can compare the effects of market volatilities on SPDR SP and ProShares Ultra 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 SPDR SP with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ProShares Ultra.
Diversification Opportunities for SPDR SP and ProShares Ultra
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and ProShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and SPDR SP 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 SPDR SP 500 are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra QQQ has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares Ultra go up and down completely randomly.
Pair Corralation between SPDR SP and ProShares Ultra
Considering the 90-day investment horizon SPDR SP is expected to generate 2.55 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, SPDR SP 500 is 2.8 times less risky than ProShares Ultra. It trades about 0.11 of its potential returns per unit of risk. ProShares Ultra QQQ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,093 in ProShares Ultra QQQ on October 20, 2024 and sell it today you would earn a total of 7,126 from holding ProShares Ultra QQQ or generate 174.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. ProShares Ultra QQQ
Performance |
| Timeline |
| SPDR SP 500 |
| ProShares Ultra QQQ |
SPDR SP and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ProShares Ultra
The main advantage of trading using opposite SPDR SP and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. ProShares UltraShort QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares Ultra 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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