Correlation Between Exchange Traded and ProShares UltraShort

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

By analyzing existing cross correlation between Exchange Traded Concepts and ProShares UltraShort Russell2000, you can compare the effects of market volatilities on Exchange Traded and ProShares UltraShort 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 Exchange Traded with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and ProShares UltraShort.

Diversification Opportunities for Exchange Traded and ProShares UltraShort

0.78

Correlation Coefficient

Exchange Traded  ProShares UltraShort

Poor diversification

The 3 months correlation between Exchange and ProShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and ProShares UltraShort Russell20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Exchange Traded 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 Exchange Traded Concepts are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Exchange Traded i.e., Exchange Traded and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Exchange Traded and ProShares UltraShort

If you would invest  2,412  in Exchange Traded Concepts on May 2, 2025 and sell it today you would earn a total of  0.00  from holding Exchange Traded Concepts or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.64%
Values	Daily Returns

Exchange Traded Concepts  vs.  ProShares UltraShort Russell20

Exchange Traded Concepts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Exchange Traded is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ProShares UltraShort

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort Russell2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Exchange Traded and ProShares UltraShort

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

The idea behind Exchange Traded Concepts and ProShares UltraShort Russell2000 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.