Correlation Between Siren Nasdaq and ProShares Trust

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

By analyzing existing cross correlation between Siren Nasdaq NexGen and ProShares Trust, you can compare the effects of market volatilities on Siren Nasdaq and ProShares Trust 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 Siren Nasdaq with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siren Nasdaq and ProShares Trust.

Diversification Opportunities for Siren Nasdaq and ProShares Trust

0.78

Correlation Coefficient

Siren Nasdaq  ProShares Trust

Poor diversification

The 3 months correlation between Siren and ProShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Siren Nasdaq NexGen and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Siren Nasdaq 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 Siren Nasdaq NexGen are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Siren Nasdaq i.e., Siren Nasdaq and ProShares Trust go up and down completely randomly.

Pair Corralation between Siren Nasdaq and ProShares Trust

Given the investment horizon of 90 days Siren Nasdaq is expected to generate 7.51 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Siren Nasdaq NexGen is 1.51 times less risky than ProShares Trust. It trades about 0.04 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,680  in ProShares Trust on October 8, 2024 and sell it today you would earn a total of  2,845  from holding ProShares Trust or generate 50.09% return on investment over 90 days.

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

Siren Nasdaq NexGen  vs.  ProShares Trust

Siren Nasdaq NexGen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siren Nasdaq NexGen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Siren Nasdaq is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ProShares Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, ProShares Trust exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siren Nasdaq and ProShares Trust

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

The idea behind Siren Nasdaq NexGen and ProShares Trust 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.