Correlation Between ProShares Trust and SPDR Barclays

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

By analyzing existing cross correlation between ProShares Trust and SPDR Barclays Short, you can compare the effects of market volatilities on ProShares Trust and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and SPDR Barclays.

Diversification Opportunities for ProShares Trust and SPDR Barclays

0.68

Correlation Coefficient

ProShares Trust  SPDR Barclays

Poor diversification

The 3 months correlation between ProShares and SPDR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and SPDR Barclays Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Short 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Short has no effect on the direction of ProShares Trust i.e., ProShares Trust and SPDR Barclays go up and down completely randomly.

Pair Corralation between ProShares Trust and SPDR Barclays

Given the investment horizon of 90 days ProShares Trust is expected to generate 44.54 times more return on investment than SPDR Barclays. However, ProShares Trust is 44.54 times more volatile than SPDR Barclays Short. It trades about 0.18 of its potential returns per unit of risk. SPDR Barclays Short is currently generating about 0.25 per unit of risk. If you would invest  4,093  in ProShares Trust on April 24, 2025 and sell it today you would earn a total of  2,063  from holding ProShares Trust or generate 50.4% return on investment over 90 days.

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

ProShares Trust  vs.  SPDR Barclays Short

ProShares Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 14 (%) 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.

SPDR Barclays Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays Short are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Trust and SPDR Barclays

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

The idea behind ProShares Trust and SPDR Barclays Short 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.