Correlation Between ProShares Trust and BlackRock Investment

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

By analyzing existing cross correlation between ProShares Trust and BlackRock Investment Quality, you can compare the effects of market volatilities on ProShares Trust and BlackRock Investment 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 Trust with a short position of BlackRock Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and BlackRock Investment.

Diversification Opportunities for ProShares Trust and BlackRock Investment

-0.73

Correlation Coefficient

ProShares Trust  BlackRock Investment

Pay attention - limited upside

The 3 months correlation between ProShares and BlackRock is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and BlackRock Investment Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Investment and ProShares Trust 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 Trust are associated (or correlated) with BlackRock Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Investment has no effect on the direction of ProShares Trust i.e., ProShares Trust and BlackRock Investment go up and down completely randomly.

Pair Corralation between ProShares Trust and BlackRock Investment

Given the investment horizon of 90 days ProShares Trust is expected to generate 5.24 times more return on investment than BlackRock Investment. However, ProShares Trust is 5.24 times more volatile than BlackRock Investment Quality. It trades about 0.18 of its potential returns per unit of risk. BlackRock Investment Quality is currently generating about -0.29 per unit of risk. If you would invest  5,970  in ProShares Trust on October 4, 2024 and sell it today you would earn a total of  2,612  from holding ProShares Trust or generate 43.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ProShares Trust  vs.  BlackRock Investment Quality

ProShares Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ProShares Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Investment Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ProShares Trust and BlackRock Investment

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

The idea behind ProShares Trust and BlackRock Investment Quality 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.