Correlation Between ProShares UltraShort and MicroSectors Travel

Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort 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 UltraShort 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 UltraShort SP500 and MicroSectors Travel 3X, you can compare the effects of market volatilities on ProShares UltraShort 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 UltraShort with a short position of MicroSectors Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and MicroSectors Travel.

Diversification Opportunities for ProShares UltraShort and MicroSectors Travel

0.95

Correlation Coefficient

ProShares UltraShort  MicroSectors Travel

Almost no diversification

The 3 months correlation between ProShares and MicroSectors is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort SP500 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 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 SP500 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 UltraShort i.e., ProShares UltraShort and MicroSectors Travel go up and down completely randomly.

Pair Corralation between ProShares UltraShort and MicroSectors Travel

Considering the 90-day investment horizon ProShares UltraShort SP500 is expected to under-perform the MicroSectors Travel. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraShort SP500 is 3.04 times less risky than MicroSectors Travel. The etf trades about -0.19 of its potential returns per unit of risk. The MicroSectors Travel 3X is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,017  in MicroSectors Travel 3X on May 14, 2025 and sell it today you would lose (157.00) from holding MicroSectors Travel 3X or give up 15.44% of portfolio value over 90 days.

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

ProShares UltraShort SP500  vs.  MicroSectors Travel 3X

ProShares UltraShort

Risk-Adjusted Performance

Weakest

Over the last 90 days ProShares UltraShort SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private 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 latest inconsistent performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with ProShares UltraShort and MicroSectors Travel

The main advantage of trading using opposite ProShares UltraShort and MicroSectors Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort 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 UltraShort SP500 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.