Correlation Between ProShares Ultra and Invesco SP

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Invesco SP 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 Invesco SP 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 Invesco SP SmallCap, you can compare the effects of market volatilities on ProShares Ultra and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Invesco SP.

Diversification Opportunities for ProShares Ultra and Invesco SP

0.94

Correlation Coefficient

ProShares Ultra  Invesco SP

Almost no diversification

The 3 months correlation between ProShares and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Invesco SP SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP SmallCap 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP SmallCap has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Invesco SP go up and down completely randomly.

Pair Corralation between ProShares Ultra and Invesco SP

Considering the 90-day investment horizon ProShares Ultra Technology is expected to generate 1.3 times more return on investment than Invesco SP. However, ProShares Ultra is 1.3 times more volatile than Invesco SP SmallCap. It trades about 0.33 of its potential returns per unit of risk. Invesco SP SmallCap is currently generating about 0.14 per unit of risk. If you would invest  5,638  in ProShares Ultra Technology on May 2, 2025 and sell it today you would earn a total of  2,676  from holding ProShares Ultra Technology or generate 47.46% 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.  Invesco SP SmallCap

ProShares Ultra Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Technology are ranked lower than 25 (%) 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.

Invesco SP SmallCap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP SmallCap are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Invesco SP displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Ultra and Invesco SP

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

The idea behind ProShares Ultra Technology and Invesco SP SmallCap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.