Correlation Between ProShares UltraShort and ProShares
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and ProShares 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 UltraShort and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort 20 and ProShares SP MidCap, you can compare the effects of market volatilities on ProShares UltraShort and ProShares 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 UltraShort with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ProShares.
Diversification Opportunities for ProShares UltraShort and ProShares
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap and ProShares UltraShort 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 UltraShort 20 are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP MidCap has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and ProShares go up and down completely randomly.
Pair Corralation between ProShares UltraShort and ProShares
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.17 times more return on investment than ProShares. However, ProShares UltraShort is 2.17 times more volatile than ProShares SP MidCap. It trades about 0.04 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.05 per unit of risk. If you would invest 2,594 in ProShares UltraShort 20 on August 27, 2024 and sell it today you would earn a total of 901.00 from holding ProShares UltraShort 20 or generate 34.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. ProShares SP MidCap
Performance |
| Timeline |
| ProShares UltraShort |
| ProShares SP MidCap |
ProShares UltraShort and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and ProShares
The main advantage of trading using opposite ProShares UltraShort and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| ProShares UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. ProShares UltraShort SP500 | ProShares UltraShort vs. iShares 20 Year | ProShares UltraShort vs. Direxion Daily 20 |
| ProShares vs. Vanguard Mid Cap Index | ProShares vs. iShares Core SP | ProShares vs. SPDR SP MIDCAP | ProShares vs. First Trust Dorsey |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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