Correlation Between Tidal Trust and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and ProShares Ultra 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 Tidal Trust and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidal Trust II and ProShares Ultra Dow30, you can compare the effects of market volatilities on Tidal Trust and ProShares Ultra 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 Tidal Trust with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and ProShares Ultra.

Diversification Opportunities for Tidal Trust and ProShares Ultra

-0.35

Correlation Coefficient

Tidal Trust  ProShares Ultra

Very good diversification

The 3 months correlation between Tidal and ProShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ProShares Ultra Dow30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Dow30 and Tidal Trust 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 Tidal Trust II are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Dow30 has no effect on the direction of Tidal Trust i.e., Tidal Trust and ProShares Ultra go up and down completely randomly.

Pair Corralation between Tidal Trust and ProShares Ultra

Given the investment horizon of 90 days Tidal Trust is expected to generate 19.5 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, Tidal Trust II is 1.75 times less risky than ProShares Ultra. It trades about 0.01 of its potential returns per unit of risk. ProShares Ultra Dow30 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9,253  in ProShares Ultra Dow30 on August 30, 2024 and sell it today you would earn a total of  1,339  from holding ProShares Ultra Dow30 or generate 14.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tidal Trust II  vs.  ProShares Ultra Dow30

Tidal Trust II

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Ultra Dow30

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Dow30 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tidal Trust and ProShares Ultra

The main advantage of trading using opposite Tidal Trust and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.

The idea behind Tidal Trust II and ProShares Ultra Dow30 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.