Correlation Between ProShares UltraPro and SPDR SP
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro SP500 and SPDR SP 500, you can compare the effects of market volatilities on ProShares UltraPro and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and SPDR SP.
Diversification Opportunities for ProShares UltraPro and SPDR SP
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ProShares and SPDR is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SP500 are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and SPDR SP go up and down completely randomly.
Pair Corralation between ProShares UltraPro and SPDR SP
Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 3.0 times more return on investment than SPDR SP. However, ProShares UltraPro is 3.0 times more volatile than SPDR SP 500. It trades about 0.09 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.11 per unit of risk. If you would invest 7,095 in ProShares UltraPro SP500 on August 23, 2024 and sell it today you would earn a total of 2,080 from holding ProShares UltraPro SP500 or generate 29.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro SP500 vs. SPDR SP 500
Performance |
| Timeline |
| ProShares UltraPro SP500 |
| SPDR SP 500 |
ProShares UltraPro and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and SPDR SP
The main advantage of trading using opposite ProShares UltraPro and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| ProShares UltraPro vs. ProShares Ultra SP500 | ProShares UltraPro vs. Direxion Daily SP500 | ProShares UltraPro vs. ProShares Ultra QQQ | ProShares UltraPro vs. Direxion Daily Technology |
| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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