Correlation Between ProShares UltraShort and MicroSectors Gold

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

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

Diversification Opportunities for ProShares UltraShort and MicroSectors Gold

0.59

Correlation Coefficient

ProShares UltraShort  MicroSectors Gold

Very weak diversification

The 3 months correlation between ProShares and MicroSectors is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Gold and MicroSectors Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Gold Miners and ProShares UltraShort 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 UltraShort Gold are associated (or correlated) with MicroSectors Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Gold Miners has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and MicroSectors Gold go up and down completely randomly.

Pair Corralation between ProShares UltraShort and MicroSectors Gold

Considering the 90-day investment horizon ProShares UltraShort Gold is expected to generate 0.39 times more return on investment than MicroSectors Gold. However, ProShares UltraShort Gold is 2.58 times less risky than MicroSectors Gold. It trades about 0.02 of its potential returns per unit of risk. MicroSectors Gold Miners is currently generating about -0.03 per unit of risk. If you would invest  2,166  in ProShares UltraShort Gold on April 22, 2025 and sell it today you would earn a total of  17.00  from holding ProShares UltraShort Gold or generate 0.78% return on investment over 90 days.

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

ProShares UltraShort Gold  vs.  MicroSectors Gold Miners

ProShares UltraShort Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, ProShares UltraShort is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MicroSectors Gold Miners

Risk-Adjusted Performance

Very Weak

Over the last 90 days MicroSectors Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with ProShares UltraShort and MicroSectors Gold

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

The idea behind ProShares UltraShort Gold and MicroSectors Gold Miners 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.