Correlation Between ProShares UltraPro and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and ProShares UltraShort 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 UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro MidCap400 and ProShares UltraShort Health, you can compare the effects of market volatilities on ProShares UltraPro and ProShares UltraShort 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 UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and ProShares UltraShort.
Diversification Opportunities for ProShares UltraPro and ProShares UltraShort
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and ProShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro MidCap400 and ProShares UltraShort Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 MidCap400 are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and ProShares UltraShort go up and down completely randomly.
Pair Corralation between ProShares UltraPro and ProShares UltraShort
Given the investment horizon of 90 days ProShares UltraPro MidCap400 is expected to generate 2.22 times more return on investment than ProShares UltraShort. However, ProShares UltraPro is 2.22 times more volatile than ProShares UltraShort Health. It trades about 0.05 of its potential returns per unit of risk. ProShares UltraShort Health is currently generating about 0.01 per unit of risk. If you would invest 1,912 in ProShares UltraPro MidCap400 on September 1, 2024 and sell it today you would earn a total of 1,471 from holding ProShares UltraPro MidCap400 or generate 76.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ProShares UltraPro MidCap400 vs. ProShares UltraShort Health
Performance |
| Timeline |
| ProShares UltraPro |
| ProShares UltraShort |
ProShares UltraPro and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and ProShares UltraShort
The main advantage of trading using opposite ProShares UltraPro and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.| ProShares UltraPro vs. ProShares UltraPro Russell2000 | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. Direxion Daily Mid | ProShares UltraPro vs. ProShares Ultra SmallCap600 |
| ProShares UltraShort vs. ProShares UltraPro MidCap400 | ProShares UltraShort vs. ProShares Short SmallCap600 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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