Correlation Between ProShares UltraShort and ProShares Short

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and ProShares 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 UltraShort and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort SP500 and ProShares Short Russell2000, you can compare the effects of market volatilities on ProShares UltraShort and ProShares 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 UltraShort with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ProShares Short.

Diversification Opportunities for ProShares UltraShort and ProShares Short

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between ProShares and ProShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 and ProShares Short Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Russ and ProShares UltraShort 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 UltraShort SP500 are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Russ has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and ProShares Short go up and down completely randomly.

Pair Corralation between ProShares UltraShort and ProShares Short

Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to under-perform the ProShares Short. In addition to that, ProShares UltraShort is 1.22 times more volatile than ProShares Short Russell2000. It trades about -0.23 of its total potential returns per unit of risk. ProShares Short Russell2000 is currently generating about -0.16 per unit of volatility. If you would invest  2,078  in ProShares Short Russell2000 on December 30, 2023 and sell it today you would lose (72.00) from holding ProShares Short Russell2000 or give up 3.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

ProShares UltraShort SP500  vs.  ProShares Short Russell2000

 Performance 
       Timeline  
ProShares UltraShort 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ProShares UltraShort SP500 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 fundamental indicators remain comparatively stable which may send shares a bit higher in April 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.
ProShares Short Russ 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ProShares Short Russell2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ProShares Short is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ProShares UltraShort and ProShares Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares UltraShort and ProShares Short

The main advantage of trading using opposite ProShares UltraShort and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, ProShares 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 ProShares Short will offset losses from the drop in ProShares Short's long position.
The idea behind ProShares UltraShort SP500 and ProShares Short Russell2000 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

Other Complementary Tools

Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Money Managers
Screen money managers from public funds and ETFs managed around the world
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios