Correlation Between AES and ProShares UltraPro

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

By analyzing existing cross correlation between The AES and ProShares UltraPro MidCap400, you can compare the effects of market volatilities on AES and ProShares UltraPro 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 AES with a short position of ProShares UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES and ProShares UltraPro.

Diversification Opportunities for AES and ProShares UltraPro

0.71

Correlation Coefficient

AES  ProShares UltraPro

Poor diversification

The 3 months correlation between AES and ProShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The AES and ProShares UltraPro MidCap400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro and AES 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 The AES are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro has no effect on the direction of AES i.e., AES and ProShares UltraPro go up and down completely randomly.

Pair Corralation between AES and ProShares UltraPro

Considering the 90-day investment horizon The AES is expected to generate 1.38 times more return on investment than ProShares UltraPro. However, AES is 1.38 times more volatile than ProShares UltraPro MidCap400. It trades about 0.14 of its potential returns per unit of risk. ProShares UltraPro MidCap400 is currently generating about 0.08 per unit of risk. If you would invest  994.00  in The AES on May 24, 2025 and sell it today you would earn a total of  303.00  from holding The AES or generate 30.48% return on investment over 90 days.

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

The AES  vs.  ProShares UltraPro MidCap400

AES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares UltraPro

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro MidCap400 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProShares UltraPro may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with AES and ProShares UltraPro

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

The idea behind The AES and ProShares UltraPro MidCap400 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.