Correlation Between ProShares Trust and ProShares UltraShort

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

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

Diversification Opportunities for ProShares Trust and ProShares UltraShort

-0.72

Correlation Coefficient

ProShares Trust  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between ProShares and ProShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and ProShares UltraShort Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and ProShares 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 ProShares Trust are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of ProShares Trust i.e., ProShares Trust and ProShares UltraShort go up and down completely randomly.

Pair Corralation between ProShares Trust and ProShares UltraShort

Given the investment horizon of 90 days ProShares Trust is expected to generate 2.36 times more return on investment than ProShares UltraShort. However, ProShares Trust is 2.36 times more volatile than ProShares UltraShort Utilities. It trades about 0.08 of its potential returns per unit of risk. ProShares UltraShort Utilities is currently generating about -0.06 per unit of risk. If you would invest  5,023  in ProShares Trust on May 18, 2025 and sell it today you would earn a total of  784.00  from holding ProShares Trust or generate 15.61% return on investment over 90 days.

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

ProShares Trust  vs.  ProShares UltraShort Utilities

ProShares Trust

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ProShares Trust unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares UltraShort

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares UltraShort Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Trust and ProShares UltraShort

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

The idea behind ProShares Trust and ProShares UltraShort Utilities 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 CEOs Directory module to screen CEOs from public companies around the world.