Correlation Between ProShares Trust and OShares Quality

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

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

Diversification Opportunities for ProShares Trust and OShares Quality

-0.61

Correlation Coefficient

ProShares Trust  OShares Quality

Excellent diversification

The 3 months correlation between ProShares and OShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and OShares Quality Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Quality Dividend 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 OShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Quality Dividend has no effect on the direction of ProShares Trust i.e., ProShares Trust and OShares Quality go up and down completely randomly.

Pair Corralation between ProShares Trust and OShares Quality

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the OShares Quality. In addition to that, ProShares Trust is 6.26 times more volatile than OShares Quality Dividend. It trades about -0.05 of its total potential returns per unit of risk. OShares Quality Dividend is currently generating about -0.22 per unit of volatility. If you would invest  5,507  in OShares Quality Dividend on September 26, 2024 and sell it today you would lose (151.00) from holding OShares Quality Dividend or give up 2.74% of portfolio value over 90 days.

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

ProShares Trust   vs.  OShares Quality Dividend

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.

OShares Quality Dividend

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OShares Quality Dividend are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, OShares Quality 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 Trust and OShares Quality

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

The idea behind ProShares Trust and OShares Quality Dividend 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.