Correlation Between ProShares Ultra and Virtus LifeSci

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

By analyzing existing cross correlation between ProShares Ultra Nasdaq and Virtus LifeSci Biotech, you can compare the effects of market volatilities on ProShares Ultra and Virtus LifeSci 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 Virtus LifeSci. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Virtus LifeSci.

Diversification Opportunities for ProShares Ultra and Virtus LifeSci

0.97

Correlation Coefficient

ProShares Ultra  Virtus LifeSci

Almost no diversification

The 3 months correlation between ProShares and Virtus is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Nasdaq and Virtus LifeSci Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus LifeSci Biotech 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 Nasdaq are associated (or correlated) with Virtus LifeSci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus LifeSci Biotech has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Virtus LifeSci go up and down completely randomly.

Pair Corralation between ProShares Ultra and Virtus LifeSci

Considering the 90-day investment horizon ProShares Ultra Nasdaq is expected to generate 1.93 times more return on investment than Virtus LifeSci. However, ProShares Ultra is 1.93 times more volatile than Virtus LifeSci Biotech. It trades about 0.06 of its potential returns per unit of risk. Virtus LifeSci Biotech is currently generating about 0.08 per unit of risk. If you would invest  4,674  in ProShares Ultra Nasdaq on May 5, 2025 and sell it today you would earn a total of  427.00  from holding ProShares Ultra Nasdaq or generate 9.14% return on investment over 90 days.

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

ProShares Ultra Nasdaq  vs.  Virtus LifeSci Biotech

ProShares Ultra Nasdaq

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Nasdaq are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Virtus LifeSci Biotech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus LifeSci Biotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Virtus LifeSci may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ProShares Ultra and Virtus LifeSci

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

The idea behind ProShares Ultra Nasdaq and Virtus LifeSci Biotech 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.