Correlation Between ProShares Ultra and VictoryShares 500

Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and VictoryShares 500 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 VictoryShares 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Ultra Yen and VictoryShares 500 Volatility, you can compare the effects of market volatilities on ProShares Ultra and VictoryShares 500 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 VictoryShares 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and VictoryShares 500.

Diversification Opportunities for ProShares Ultra and VictoryShares 500

-0.78

Correlation Coefficient

ProShares Ultra  VictoryShares 500

Pay attention - limited upside

The 3 months correlation between ProShares and VictoryShares is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and VictoryShares 500 Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares 500 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 Yen are associated (or correlated) with VictoryShares 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares 500 has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and VictoryShares 500 go up and down completely randomly.

Pair Corralation between ProShares Ultra and VictoryShares 500

Considering the 90-day investment horizon ProShares Ultra is expected to generate 1.85 times less return on investment than VictoryShares 500. But when comparing it to its historical volatility, ProShares Ultra Yen is 1.02 times less risky than VictoryShares 500. It trades about 0.12 of its potential returns per unit of risk. VictoryShares 500 Volatility is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,622  in VictoryShares 500 Volatility on February 5, 2025 and sell it today you would earn a total of  723.00  from holding VictoryShares 500 Volatility or generate 9.49% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  VictoryShares 500 Volatility

ProShares Ultra Yen

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Yen are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, ProShares Ultra may actually be approaching a critical reversion point that can send shares even higher in June 2025.

VictoryShares 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares 500 Volatility has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, VictoryShares 500 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and VictoryShares 500

The main advantage of trading using opposite ProShares Ultra and VictoryShares 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, VictoryShares 500 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 VictoryShares 500 will offset losses from the drop in VictoryShares 500's long position.

The idea behind ProShares Ultra Yen and VictoryShares 500 Volatility 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.