Correlation Between ProShares Trust and Esoterica NextG

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

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

Diversification Opportunities for ProShares Trust and Esoterica NextG

-0.75

Correlation Coefficient

ProShares Trust  Esoterica NextG

Pay attention - limited upside

The 3 months correlation between ProShares and Esoterica is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Esoterica NextG Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esoterica NextG Economy 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 Esoterica NextG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esoterica NextG Economy has no effect on the direction of ProShares Trust i.e., ProShares Trust and Esoterica NextG go up and down completely randomly.

Pair Corralation between ProShares Trust and Esoterica NextG

Given the investment horizon of 90 days ProShares Trust is expected to generate 1.57 times more return on investment than Esoterica NextG. However, ProShares Trust is 1.57 times more volatile than Esoterica NextG Economy. It trades about 0.04 of its potential returns per unit of risk. Esoterica NextG Economy is currently generating about -0.05 per unit of risk. If you would invest  2,371  in ProShares Trust on December 28, 2024 and sell it today you would earn a total of  120.00  from holding ProShares Trust or generate 5.06% return on investment over 90 days.

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

ProShares Trust   vs.  Esoterica NextG Economy

ProShares Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ProShares Trust may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Esoterica NextG Economy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esoterica NextG Economy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with ProShares Trust and Esoterica NextG

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

The idea behind ProShares Trust and Esoterica NextG Economy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.