Correlation Between ProShares Ultra and WisdomTree Emerging

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

By analyzing existing cross correlation between ProShares Ultra Technology and WisdomTree Emerging Markets, you can compare the effects of market volatilities on ProShares Ultra and WisdomTree Emerging 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 WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and WisdomTree Emerging.

Diversification Opportunities for ProShares Ultra and WisdomTree Emerging

0.98

Correlation Coefficient

ProShares Ultra  WisdomTree Emerging

Almost no diversification

The 3 months correlation between ProShares and WisdomTree is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging 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 Technology are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree Emerging go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree Emerging

Considering the 90-day investment horizon ProShares Ultra Technology is expected to generate 2.79 times more return on investment than WisdomTree Emerging. However, ProShares Ultra is 2.79 times more volatile than WisdomTree Emerging Markets. It trades about 0.41 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.27 per unit of risk. If you would invest  4,712  in ProShares Ultra Technology on April 23, 2025 and sell it today you would earn a total of  3,348  from holding ProShares Ultra Technology or generate 71.05% return on investment over 90 days.

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

ProShares Ultra Technology  vs.  WisdomTree Emerging Markets

ProShares Ultra Tech

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Technology are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, ProShares Ultra displayed solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Emerging

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, WisdomTree Emerging exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and WisdomTree Emerging

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

The idea behind ProShares Ultra Technology and WisdomTree Emerging Markets 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.