Correlation Between ProShares UltraPro and Dimensional ETF

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

By analyzing existing cross correlation between ProShares UltraPro SP500 and Dimensional ETF Trust, you can compare the effects of market volatilities on ProShares UltraPro and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Dimensional ETF.

Diversification Opportunities for ProShares UltraPro and Dimensional ETF

0.98

Correlation Coefficient

ProShares UltraPro  Dimensional ETF

Almost no diversification

The 3 months correlation between ProShares and Dimensional is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro SP500 and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 SP500 are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Dimensional ETF go up and down completely randomly.

Pair Corralation between ProShares UltraPro and Dimensional ETF

Given the investment horizon of 90 days ProShares UltraPro SP500 is expected to generate 3.04 times more return on investment than Dimensional ETF. However, ProShares UltraPro is 3.04 times more volatile than Dimensional ETF Trust. It trades about 0.25 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.23 per unit of risk. If you would invest  7,172  in ProShares UltraPro SP500 on May 2, 2025 and sell it today you would earn a total of  2,632  from holding ProShares UltraPro SP500 or generate 36.7% return on investment over 90 days.

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

ProShares UltraPro SP500  vs.  Dimensional ETF Trust

ProShares UltraPro SP500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro SP500 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, ProShares UltraPro displayed solid returns over the last few months and may actually be approaching a breakup point.

Dimensional ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Dimensional ETF may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with ProShares UltraPro and Dimensional ETF

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

The idea behind ProShares UltraPro SP500 and Dimensional ETF Trust 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.