Correlation Between ProShares Short and MicroSectors Travel

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

By analyzing existing cross correlation between ProShares Short QQQ and MicroSectors Travel 3X, you can compare the effects of market volatilities on ProShares Short and MicroSectors Travel 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 Short with a short position of MicroSectors Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and MicroSectors Travel.

Diversification Opportunities for ProShares Short and MicroSectors Travel

0.91

Correlation Coefficient

ProShares Short  MicroSectors Travel

Almost no diversification

The 3 months correlation between ProShares and MicroSectors is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short QQQ and MicroSectors Travel 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Travel and ProShares Short 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 Short QQQ are associated (or correlated) with MicroSectors Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Travel has no effect on the direction of ProShares Short i.e., ProShares Short and MicroSectors Travel go up and down completely randomly.

Pair Corralation between ProShares Short and MicroSectors Travel

Considering the 90-day investment horizon ProShares Short QQQ is expected to generate 0.19 times more return on investment than MicroSectors Travel. However, ProShares Short QQQ is 5.29 times less risky than MicroSectors Travel. It trades about -0.21 of its potential returns per unit of risk. MicroSectors Travel 3X is currently generating about -0.16 per unit of risk. If you would invest  3,594  in ProShares Short QQQ on May 22, 2025 and sell it today you would lose (348.00) from holding ProShares Short QQQ or give up 9.68% of portfolio value over 90 days.

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

ProShares Short QQQ  vs.  MicroSectors Travel 3X

ProShares Short QQQ

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares Short QQQ has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

MicroSectors Travel

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors Travel 3X has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with ProShares Short and MicroSectors Travel

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

The idea behind ProShares Short QQQ and MicroSectors Travel 3X 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.