Correlation Between Global X and ProShares Ultra

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

By analyzing existing cross correlation between Global X Funds and ProShares Ultra Russell2000, you can compare the effects of market volatilities on Global X and ProShares Ultra 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 Global X with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ProShares Ultra.

Diversification Opportunities for Global X and ProShares Ultra

-0.81

Correlation Coefficient

Global X  ProShares Ultra

Pay attention - limited upside

The 3 months correlation between Global and ProShares is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and ProShares Ultra Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Russ and Global X 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 Global X Funds are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Russ has no effect on the direction of Global X i.e., Global X and ProShares Ultra go up and down completely randomly.

Pair Corralation between Global X and ProShares Ultra

Given the investment horizon of 90 days Global X Funds is expected to generate 0.5 times more return on investment than ProShares Ultra. However, Global X Funds is 1.99 times less risky than ProShares Ultra. It trades about 0.22 of its potential returns per unit of risk. ProShares Ultra Russell2000 is currently generating about 0.1 per unit of risk. If you would invest  4,730  in Global X Funds on February 2, 2025 and sell it today you would earn a total of  603.00  from holding Global X Funds or generate 12.75% return on investment over 90 days.

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

Global X Funds  vs.  ProShares Ultra Russell2000

Global X Funds

Risk-Adjusted Performance

Solid

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

ProShares Ultra Russ

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Russell2000 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 very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Global X and ProShares Ultra

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

The idea behind Global X Funds and ProShares Ultra Russell2000 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.