Correlation Between SPDR Bloomberg and ProShares Ultra

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

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

Diversification Opportunities for SPDR Bloomberg and ProShares Ultra

-0.81

Correlation Coefficient

SPDR Bloomberg  ProShares Ultra

Pay attention - limited upside

The 3 months correlation between SPDR and ProShares is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg International and ProShares Ultra QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra QQQ and SPDR Bloomberg 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 SPDR Bloomberg International 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 QQQ has no effect on the direction of SPDR Bloomberg i.e., SPDR Bloomberg and ProShares Ultra go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and ProShares Ultra

Given the investment horizon of 90 days SPDR Bloomberg is expected to generate 4.75 times less return on investment than ProShares Ultra. But when comparing it to its historical volatility, SPDR Bloomberg International is 4.78 times less risky than ProShares Ultra. It trades about 0.05 of its potential returns per unit of risk. ProShares Ultra QQQ is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,874  in ProShares Ultra QQQ on January 16, 2025 and sell it today you would earn a total of  3,084  from holding ProShares Ultra QQQ or generate 63.27% return on investment over 90 days.

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

SPDR Bloomberg International  vs.  ProShares Ultra QQQ

SPDR Bloomberg Inter

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg International are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, SPDR Bloomberg may actually be approaching a critical reversion point that can send shares even higher in May 2025.

ProShares Ultra QQQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra QQQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with SPDR Bloomberg and ProShares Ultra

The main advantage of trading using opposite SPDR Bloomberg and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Bloomberg 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 SPDR Bloomberg International and ProShares Ultra QQQ 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.