Correlation Between ProShares Trust and ProShares

Can any of the company-specific risk be diversified away by investing in both ProShares Trust and ProShares 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 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 SP Technology, you can compare the effects of market volatilities on ProShares Trust and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and ProShares.

Diversification Opportunities for ProShares Trust and ProShares

0.02

Correlation Coefficient

ProShares Trust  ProShares

Significant diversification

The 3 months correlation between ProShares and ProShares is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of ProShares Trust i.e., ProShares Trust and ProShares go up and down completely randomly.

Pair Corralation between ProShares Trust and ProShares

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the ProShares. In addition to that, ProShares Trust is 3.75 times more volatile than ProShares SP Technology. It trades about -0.2 of its total potential returns per unit of risk. ProShares SP Technology is currently generating about 0.01 per unit of volatility. If you would invest  7,685  in ProShares SP Technology on October 20, 2024 and sell it today you would earn a total of  37.00  from holding ProShares SP Technology or generate 0.48% return on investment over 90 days.

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

ProShares Trust   vs.  ProShares SP Technology

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

ProShares SP Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, ProShares is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares Trust and ProShares

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

The idea behind ProShares Trust and ProShares SP Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.