Correlation Between ProShares Trust and ProShares Big

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

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

Diversification Opportunities for ProShares Trust and ProShares Big

-0.97

Correlation Coefficient

ProShares Trust  ProShares Big

Pay attention - limited upside

The 3 months correlation between ProShares and ProShares is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and ProShares Big Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Big Data 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 ProShares Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Big Data has no effect on the direction of ProShares Trust i.e., ProShares Trust and ProShares Big go up and down completely randomly.

Pair Corralation between ProShares Trust and ProShares Big

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the ProShares Big. In addition to that, ProShares Trust is 2.31 times more volatile than ProShares Big Data. It trades about -0.27 of its total potential returns per unit of risk. ProShares Big Data is currently generating about 0.34 per unit of volatility. If you would invest  3,486  in ProShares Big Data on September 14, 2024 and sell it today you would earn a total of  1,223  from holding ProShares Big Data or generate 35.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ProShares Trust   vs.  ProShares Big Data

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

ProShares Big Data

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Big Data are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ProShares Big unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and ProShares Big

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

The idea behind ProShares Trust and ProShares Big Data 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.