Correlation Between MicroSectors FANG and ProShares UltraPro

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

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

Diversification Opportunities for MicroSectors FANG and ProShares UltraPro

0.61

Correlation Coefficient

MicroSectors FANG  ProShares UltraPro

Poor diversification

The 3 months correlation between MicroSectors and ProShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and ProShares UltraPro go up and down completely randomly.

Pair Corralation between MicroSectors FANG and ProShares UltraPro

If you would invest  43,390  in MicroSectors FANG Index on May 16, 2025 and sell it today you would earn a total of  0.00  from holding MicroSectors FANG Index or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	6.56%
Values	Daily Returns

MicroSectors FANG Index  vs.  ProShares UltraPro Short

MicroSectors FANG Index

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MicroSectors FANG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares UltraPro Short

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares UltraPro Short has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with MicroSectors FANG and ProShares UltraPro

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

The idea behind MicroSectors FANG Index and ProShares UltraPro 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.