Correlation Between Microsoft and ProShares UltraShort

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

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

Diversification Opportunities for Microsoft and ProShares UltraShort

0.08

Correlation Coefficient

Microsoft  ProShares UltraShort

Significant diversification

The 3 months correlation between Microsoft and ProShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and Microsoft 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 Microsoft 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 MSCI has no effect on the direction of Microsoft i.e., Microsoft and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Microsoft and ProShares UltraShort

Given the investment horizon of 90 days Microsoft is expected to generate 0.69 times more return on investment than ProShares UltraShort. However, Microsoft is 1.44 times less risky than ProShares UltraShort. It trades about 0.08 of its potential returns per unit of risk. ProShares UltraShort MSCI is currently generating about -0.11 per unit of risk. If you would invest  49,690  in Microsoft on July 4, 2025 and sell it today you would earn a total of  2,281  from holding Microsoft or generate 4.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Microsoft  vs.  ProShares UltraShort MSCI

Microsoft

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares UltraShort MSCI

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares UltraShort MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Microsoft and ProShares UltraShort

The main advantage of trading using opposite Microsoft and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and ProShares UltraShort MSCI 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.