Correlation Between ProShares Ultra and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 Ultra 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 Ultra MSCI and ProShares Short SmallCap600, you can compare the effects of market volatilities on ProShares Ultra 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 Ultra with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares Short.
Diversification Opportunities for ProShares Ultra and ProShares Short
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra MSCI and ProShares Short SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Smal 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 MSCI 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 Smal has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares Short go up and down completely randomly.
Pair Corralation between ProShares Ultra and ProShares Short
Considering the 90-day investment horizon ProShares Ultra MSCI is expected to under-perform the ProShares Short. In addition to that, ProShares Ultra is 1.54 times more volatile than ProShares Short SmallCap600. It trades about -0.3 of its total potential returns per unit of risk. ProShares Short SmallCap600 is currently generating about -0.26 per unit of volatility. If you would invest 1,504 in ProShares Short SmallCap600 on September 3, 2024 and sell it today you would lose (141.00) from holding ProShares Short SmallCap600 or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra MSCI vs. ProShares Short SmallCap600
Performance |
| Timeline |
| ProShares Ultra MSCI |
| ProShares Short Smal |
ProShares Ultra and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and ProShares Short
The main advantage of trading using opposite ProShares Ultra and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. Direxion Daily SP500 | ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. Direxion Daily SP |
| ProShares Short vs. ProShares UltraShort FTSE | ProShares Short vs. ProShares UltraShort MSCI | ProShares Short vs. ProShares Ultra MSCI | ProShares Short vs. ProShares UltraShort MSCI |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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