Correlation Between ProShares UltraPro and 1x Short
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and 1x 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 UltraPro and 1x Short 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 1x Short VIX, you can compare the effects of market volatilities on ProShares UltraPro and 1x 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 UltraPro with a short position of 1x Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and 1x Short.
Diversification Opportunities for ProShares UltraPro and 1x Short
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ProShares and SVIX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro MidCap400 and 1x Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1x Short VIX 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 1x Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1x Short VIX has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and 1x Short go up and down completely randomly.
Pair Corralation between ProShares UltraPro and 1x Short
Given the investment horizon of 90 days ProShares UltraPro MidCap400 is expected to generate 0.55 times more return on investment than 1x Short. However, ProShares UltraPro MidCap400 is 1.82 times less risky than 1x Short. It trades about 0.1 of its potential returns per unit of risk. 1x Short VIX is currently generating about -0.03 per unit of risk. If you would invest 2,414 in ProShares UltraPro MidCap400 on September 2, 2024 and sell it today you would earn a total of 998.00 from holding ProShares UltraPro MidCap400 or generate 41.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro MidCap400 vs. 1x Short VIX
Performance |
| Timeline |
| ProShares UltraPro |
| 1x Short VIX |
ProShares UltraPro and 1x Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and 1x Short
The main advantage of trading using opposite ProShares UltraPro and 1x Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, 1x 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 1x Short will offset losses from the drop in 1x Short'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 |
| 1x Short vs. 2x Long VIX | 1x Short vs. ProShares VIX Mid Term | 1x Short vs. ProShares Short VIX | 1x Short vs. AXS 2X Innovation |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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