Correlation Between ProShares Ultra and ProShares Ultra

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Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 ProShares Ultra and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Financials and ProShares Ultra Basic, you can compare the effects of market volatilities on ProShares Ultra 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 ProShares Ultra with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and ProShares Ultra.

Diversification Opportunities for ProShares Ultra and ProShares Ultra

ProSharesProSharesDiversified AwayProSharesProSharesDiversified Away100%
-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between ProShares and ProShares is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Financials and ProShares Ultra Basic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Basic 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 Financials 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 Basic has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and ProShares Ultra go up and down completely randomly.

Pair Corralation between ProShares Ultra and ProShares Ultra

Considering the 90-day investment horizon ProShares Ultra Financials is expected to generate 1.36 times more return on investment than ProShares Ultra. However, ProShares Ultra is 1.36 times more volatile than ProShares Ultra Basic. It trades about 0.06 of its potential returns per unit of risk. ProShares Ultra Basic is currently generating about -0.19 per unit of risk. If you would invest  7,749  in ProShares Ultra Financials on September 19, 2024 and sell it today you would earn a total of  521.00  from holding ProShares Ultra Financials or generate 6.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ProShares Ultra Financials  vs.  ProShares Ultra Basic

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -50510152025
JavaScript chart by amCharts 3.21.15UYG UYM
       Timeline  
ProShares Ultra Fina 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Financials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7580859095
ProShares Ultra Basic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares Ultra Basic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2425262728293031

ProShares Ultra and ProShares Ultra Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.56-4.91-3.26-1.620.02741.753.55.257.0 0.050.100.15
JavaScript chart by amCharts 3.21.15UYG UYM
       Returns  

Pair Trading with ProShares Ultra and ProShares Ultra

The main advantage of trading using opposite ProShares Ultra and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 ProShares Ultra Financials and ProShares Ultra Basic 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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