Correlation Between SPDR SP and ProShares UltraPro

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

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

Diversification Opportunities for SPDR SP and ProShares UltraPro

-0.99

Correlation Coefficient

SPDR SP  ProShares UltraPro

Pay attention - limited upside

The 3 months correlation between SPDR and ProShares is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Semiconductor and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short and SPDR SP 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 SPDR SP Semiconductor are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares UltraPro go up and down completely randomly.

Pair Corralation between SPDR SP and ProShares UltraPro

Considering the 90-day investment horizon SPDR SP Semiconductor is expected to generate 0.87 times more return on investment than ProShares UltraPro. However, SPDR SP Semiconductor is 1.15 times less risky than ProShares UltraPro. It trades about 0.25 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.23 per unit of risk. If you would invest  20,388  in SPDR SP Semiconductor on May 2, 2025 and sell it today you would earn a total of  6,645  from holding SPDR SP Semiconductor or generate 32.59% return on investment over 90 days.

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

SPDR SP Semiconductor  vs.  ProShares UltraPro Short

SPDR SP Semiconductor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Semiconductor are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPDR SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

ProShares UltraPro Short

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraPro Short has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with SPDR SP and ProShares UltraPro

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

The idea behind SPDR SP Semiconductor and ProShares UltraPro Short 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.