Correlation Between ProShares Large and ProShares Inflation

Can any of the company-specific risk be diversified away by investing in both ProShares Large and ProShares Inflation 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 Inflation 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 Inflation Expectations, you can compare the effects of market volatilities on ProShares Large and ProShares Inflation 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 Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Large and ProShares Inflation.

Diversification Opportunities for ProShares Large and ProShares Inflation

0.78

Correlation Coefficient

ProShares Large  ProShares Inflation

Poor diversification

The 3 months correlation between ProShares and ProShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Large Cap and ProShares Inflation Expectatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Inflation 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 Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Inflation has no effect on the direction of ProShares Large i.e., ProShares Large and ProShares Inflation go up and down completely randomly.

Pair Corralation between ProShares Large and ProShares Inflation

Considering the 90-day investment horizon ProShares Large Cap is expected to generate 2.16 times more return on investment than ProShares Inflation. However, ProShares Large is 2.16 times more volatile than ProShares Inflation Expectations. It trades about 0.27 of its potential returns per unit of risk. ProShares Inflation Expectations is currently generating about 0.15 per unit of risk. If you would invest  6,282  in ProShares Large Cap on April 28, 2025 and sell it today you would earn a total of  916.00  from holding ProShares Large Cap or generate 14.58% return on investment over 90 days.

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

ProShares Large Cap  vs.  ProShares Inflation Expectatio

ProShares Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Large Cap are ranked lower than 21 (%) 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 Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Inflation Expectations are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Large and ProShares Inflation

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

The idea behind ProShares Large Cap and ProShares Inflation Expectations 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.