Correlation Between ProShares Ultra and WisdomTree Continuous

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

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

Diversification Opportunities for ProShares Ultra and WisdomTree Continuous

0.7

Correlation Coefficient

ProShares Ultra  WisdomTree Continuous

Poor diversification

The 3 months correlation between ProShares and WisdomTree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and WisdomTree Continuous Commodit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Continuous 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 Semiconductors are associated (or correlated) with WisdomTree Continuous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Continuous has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and WisdomTree Continuous go up and down completely randomly.

Pair Corralation between ProShares Ultra and WisdomTree Continuous

Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 4.66 times more return on investment than WisdomTree Continuous. However, ProShares Ultra is 4.66 times more volatile than WisdomTree Continuous Commodity. It trades about 0.38 of its potential returns per unit of risk. WisdomTree Continuous Commodity is currently generating about 0.14 per unit of risk. If you would invest  4,148  in ProShares Ultra Semiconductors on May 3, 2025 and sell it today you would earn a total of  4,428  from holding ProShares Ultra Semiconductors or generate 106.75% return on investment over 90 days.

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

ProShares Ultra Semiconductors  vs.  WisdomTree Continuous Commodit

ProShares Ultra Semi

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Semiconductors are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares Ultra exhibited solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Continuous

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Continuous Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, WisdomTree Continuous is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ProShares Ultra and WisdomTree Continuous

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

The idea behind ProShares Ultra Semiconductors and WisdomTree Continuous Commodity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.