Correlation Between ProShares Ultra and Defiance Daily

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

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

Diversification Opportunities for ProShares Ultra and Defiance Daily

0.79

Correlation Coefficient

ProShares Ultra  Defiance Daily

Poor diversification

The 3 months correlation between ProShares and Defiance is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and Defiance Daily Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Daily Target and ProShares Ultra 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 Ultra QQQ are associated (or correlated) with Defiance Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Daily Target has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Defiance Daily go up and down completely randomly.

Pair Corralation between ProShares Ultra and Defiance Daily

Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.72 times less return on investment than Defiance Daily. But when comparing it to its historical volatility, ProShares Ultra QQQ is 4.36 times less risky than Defiance Daily. It trades about 0.08 of its potential returns per unit of risk. Defiance Daily Target is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,487  in Defiance Daily Target on August 16, 2025 and sell it today you would lose (743.00) from holding Defiance Daily Target or give up 5.95% of portfolio value over 90 days.

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

ProShares Ultra QQQ  vs.  Defiance Daily Target

ProShares Ultra QQQ

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra QQQ are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Defiance Daily Target

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Daily Target are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Defiance Daily showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Defiance Daily

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

The idea behind ProShares Ultra QQQ and Defiance Daily Target 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.