Correlation Between ProShares Trust and RS Public

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

By analyzing existing cross correlation between ProShares Trust and RS Public, you can compare the effects of market volatilities on ProShares Trust and RS Public 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 RS Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and RS Public.

Diversification Opportunities for ProShares Trust and RS Public

-0.67

Correlation Coefficient

ProShares Trust  RS Public

Excellent diversification

The 3 months correlation between ProShares and RS Public is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and RS Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS Public 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 RS Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Public has no effect on the direction of ProShares Trust i.e., ProShares Trust and RS Public go up and down completely randomly.

Pair Corralation between ProShares Trust and RS Public

Given the investment horizon of 90 days ProShares Trust is expected to generate 4.96 times less return on investment than RS Public. But when comparing it to its historical volatility, ProShares Trust is 13.27 times less risky than RS Public. It trades about 0.11 of its potential returns per unit of risk. RS Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  714.00  in RS Public on October 4, 2024 and sell it today you would lose (169.00) from holding RS Public or give up 23.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.83%
Values	Daily Returns

ProShares Trust  vs.  RS Public

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.

RS Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RS Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, RS Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Trust and RS Public

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

The idea behind ProShares Trust and RS Public 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.