Correlation Between ProShares Ultra and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 Ultra 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 Ultra SP500 and ProShares UltraPro QQQ, you can compare the effects of market volatilities on ProShares Ultra 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 Ultra with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares UltraPro.
Diversification Opportunities for ProShares Ultra and ProShares UltraPro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and ProShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra SP500 and ProShares UltraPro QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro QQQ 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 SP500 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 QQQ has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares UltraPro go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares UltraPro
Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.42 times less return on investment than ProShares UltraPro. But when comparing it to its historical volatility, ProShares Ultra SP500 is 2.14 times less risky than ProShares UltraPro. It trades about 0.12 of its potential returns per unit of risk. ProShares UltraPro QQQ is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,839 in ProShares UltraPro QQQ on August 30, 2024 and sell it today you would earn a total of 951.00 from holding ProShares UltraPro QQQ or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra SP500 vs. ProShares UltraPro QQQ
Performance |
| Timeline |
| ProShares Ultra SP500 |
| ProShares UltraPro QQQ |
ProShares Ultra and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ProShares UltraPro
The main advantage of trading using opposite ProShares Ultra and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares UltraShort SP500 | ProShares Ultra vs. ProShares Ultra Financials |
| ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. Direxion Daily Semiconductor | ProShares UltraPro vs. ProShares UltraPro SP500 | ProShares UltraPro vs. Direxion Daily SP500 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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