Correlation Between ProShares UltraShort and ProShares

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

By analyzing existing cross correlation between ProShares UltraShort Top and ProShares SP 500, you can compare the effects of market volatilities on ProShares UltraShort and ProShares 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 UltraShort with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and ProShares.

Diversification Opportunities for ProShares UltraShort and ProShares

0.06

Correlation Coefficient

ProShares UltraShort  ProShares

Significant diversification

The 3 months correlation between ProShares and ProShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Top and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and ProShares UltraShort 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 UltraShort Top are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and ProShares go up and down completely randomly.

Pair Corralation between ProShares UltraShort and ProShares

Given the investment horizon of 90 days ProShares UltraShort Top is expected to under-perform the ProShares. In addition to that, ProShares UltraShort is 3.13 times more volatile than ProShares SP 500. It trades about -0.29 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about 0.27 per unit of volatility. If you would invest  3,963  in ProShares SP 500 on May 21, 2025 and sell it today you would earn a total of  410.00  from holding ProShares SP 500 or generate 10.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

ProShares UltraShort Top  vs.  ProShares SP 500

ProShares UltraShort Top

Risk-Adjusted Performance

Weakest

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

ProShares SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ProShares UltraShort and ProShares

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

The idea behind ProShares UltraShort Top and ProShares SP 500 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.