Correlation Between ProShares UltraPro and JPMorgan Nasdaq

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

By analyzing existing cross correlation between ProShares UltraPro Short and JPMorgan Nasdaq Equity, you can compare the effects of market volatilities on ProShares UltraPro and JPMorgan Nasdaq 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 UltraPro with a short position of JPMorgan Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and JPMorgan Nasdaq.

Diversification Opportunities for ProShares UltraPro and JPMorgan Nasdaq

-0.97

Correlation Coefficient

ProShares UltraPro  JPMorgan Nasdaq

Pay attention - limited upside

The 3 months correlation between ProShares and JPMorgan is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and JPMorgan Nasdaq Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Nasdaq Equity and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with JPMorgan Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Nasdaq Equity has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and JPMorgan Nasdaq go up and down completely randomly.

Pair Corralation between ProShares UltraPro and JPMorgan Nasdaq

Given the investment horizon of 90 days ProShares UltraPro Short is expected to generate 2.72 times more return on investment than JPMorgan Nasdaq. However, ProShares UltraPro is 2.72 times more volatile than JPMorgan Nasdaq Equity. It trades about 0.11 of its potential returns per unit of risk. JPMorgan Nasdaq Equity is currently generating about -0.1 per unit of risk. If you would invest  2,051  in ProShares UltraPro Short on January 18, 2025 and sell it today you would earn a total of  717.00  from holding ProShares UltraPro Short or generate 34.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

ProShares UltraPro Short  vs.  JPMorgan Nasdaq Equity

ProShares UltraPro Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ProShares UltraPro unveiled solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Nasdaq Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Nasdaq Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with ProShares UltraPro and JPMorgan Nasdaq

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

The idea behind ProShares UltraPro Short and JPMorgan Nasdaq Equity 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.