Correlation Between ProShares Large and ProShares Ultra

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

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

Diversification Opportunities for ProShares Large and ProShares Ultra

0.48

Correlation Coefficient

ProShares Large  ProShares Ultra

Very weak diversification

The 3 months correlation between ProShares and ProShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Large Cap and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI and ProShares Large 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 Large Cap are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra MSCI has no effect on the direction of ProShares Large i.e., ProShares Large and ProShares Ultra go up and down completely randomly.

Pair Corralation between ProShares Large and ProShares Ultra

Considering the 90-day investment horizon ProShares Large Cap is expected to generate 0.59 times more return on investment than ProShares Ultra. However, ProShares Large Cap is 1.69 times less risky than ProShares Ultra. It trades about 0.33 of its potential returns per unit of risk. ProShares Ultra MSCI is currently generating about 0.18 per unit of risk. If you would invest  5,978  in ProShares Large Cap on April 22, 2025 and sell it today you would earn a total of  1,163  from holding ProShares Large Cap or generate 19.45% return on investment over 90 days.

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

ProShares Large Cap  vs.  ProShares Ultra MSCI

ProShares Large Cap

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Large Cap are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, ProShares Large displayed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Ultra MSCI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra MSCI are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Large and ProShares Ultra

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

The idea behind ProShares Large Cap and ProShares Ultra MSCI 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.