Correlation Between First Trust and ProShares UltraPro

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

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

Diversification Opportunities for First Trust and ProShares UltraPro

-0.95

Correlation Coefficient

First Trust  ProShares UltraPro

Pay attention - limited upside

The 3 months correlation between First and ProShares is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Multi Manager 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 First Trust 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 First Trust Multi Manager 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 First Trust i.e., First Trust and ProShares UltraPro go up and down completely randomly.

Pair Corralation between First Trust and ProShares UltraPro

Given the investment horizon of 90 days First Trust Multi Manager is expected to generate 0.29 times more return on investment than ProShares UltraPro. However, First Trust Multi Manager is 3.44 times less risky than ProShares UltraPro. It trades about 0.15 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.11 per unit of risk. If you would invest  1,957  in First Trust Multi Manager on May 18, 2025 and sell it today you would earn a total of  190.00  from holding First Trust Multi Manager or generate 9.71% return on investment over 90 days.

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

First Trust Multi Manager  vs.  ProShares UltraPro Short

First Trust Multi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Manager are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with First Trust and ProShares UltraPro

The main advantage of trading using opposite First Trust and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Multi Manager 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.

Check out your portfolio center.

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.