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

0.83

Correlation Coefficient

Siren Nasdaq  ProShares Trust

Very poor diversification

The 3 months correlation between Siren and ProShares is 0.83. 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 NexGen is expected to under-perform the ProShares Trust. But the etf apears to be less risky and, when comparing its historical volatility, Siren Nasdaq NexGen is 1.68 times less risky than ProShares Trust. The etf trades about -0.26 of its potential returns per unit of risk. The ProShares Trust is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  8,059  in ProShares Trust on October 7, 2024 and sell it today you would lose (983.00) from holding ProShares Trust or give up 12.2% of portfolio value over 90 days.

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

Siren Nasdaq NexGen  vs.  ProShares Trust

Siren Nasdaq NexGen

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siren Nasdaq NexGen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Siren Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ProShares Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, ProShares Trust demonstrated 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.