Correlation Between IPath Series and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both IPath Series and ProShares UltraShort 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 IPath Series and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and ProShares UltraShort SP500, you can compare the effects of market volatilities on IPath Series and ProShares UltraShort 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 IPath Series with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and ProShares UltraShort.
Diversification Opportunities for IPath Series and ProShares UltraShort
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IPath and ProShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and IPath Series 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 iPath Series B are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of IPath Series i.e., IPath Series and ProShares UltraShort go up and down completely randomly.
Pair Corralation between IPath Series and ProShares UltraShort
Considering the 90-day investment horizon iPath Series B is expected to generate 2.51 times more return on investment than ProShares UltraShort. However, IPath Series is 2.51 times more volatile than ProShares UltraShort SP500. It trades about -0.01 of its potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.09 per unit of risk. If you would invest 3,867 in iPath Series B on August 20, 2025 and sell it today you would lose (232.00) from holding iPath Series B or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPath Series B vs. ProShares UltraShort SP500
Performance |
| Timeline |
| iPath Series B |
| ProShares UltraShort |
IPath Series and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and ProShares UltraShort
The main advantage of trading using opposite IPath Series and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.| IPath Series vs. iPath Series B | IPath Series vs. iShares SP GSCI | IPath Series vs. iShares Micro Cap ETF | IPath Series vs. ProShares SP 500 |
| ProShares UltraShort vs. ProShares UltraPro Russell2000 | ProShares UltraShort vs. ProShares UltraPro Short | ProShares UltraShort vs. ProShares Ultra Dow30 | ProShares UltraShort vs. ProShares Short QQQ |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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