Correlation Between ProShares Ultra and WisdomTree China

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

By analyzing existing cross correlation between ProShares Ultra Oil and WisdomTree China ex State Owned, you can compare the effects of market volatilities on ProShares Ultra and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and WisdomTree China.

Diversification Opportunities for ProShares Ultra and WisdomTree China

0.55

Correlation Coefficient

ProShares Ultra  WisdomTree China

Very weak diversification

The 3 months correlation between ProShares and WisdomTree is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Oil and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 Oil are associated (or correlated) with WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree China go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree China

Considering the 90-day investment horizon ProShares Ultra is expected to generate 4.28 times less return on investment than WisdomTree China. In addition to that, ProShares Ultra is 1.6 times more volatile than WisdomTree China ex State Owned. It trades about 0.05 of its total potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.35 per unit of volatility. If you would invest  3,416  in WisdomTree China ex State Owned on July 4, 2025 and sell it today you would earn a total of  1,064  from holding WisdomTree China ex State Owned or generate 31.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ProShares Ultra Oil  vs.  WisdomTree China ex State Owne

ProShares Ultra Oil

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Oil are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in November 2025.

WisdomTree China

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree China ex State Owned are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, WisdomTree China exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and WisdomTree China

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

The idea behind ProShares Ultra Oil and WisdomTree China ex State Owned 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.