Correlation Between ProShares Long and Global X

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

By analyzing existing cross correlation between ProShares Long OnlineShort and Global X E commerce, you can compare the effects of market volatilities on ProShares Long and Global X 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 Long with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Long and Global X.

Diversification Opportunities for ProShares Long and Global X

0.83

Correlation Coefficient

ProShares Long  Global X

Very poor diversification

The 3 months correlation between ProShares and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Long OnlineShort and Global X E commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X E and ProShares Long 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 Long OnlineShort are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X E has no effect on the direction of ProShares Long i.e., ProShares Long and Global X go up and down completely randomly.

Pair Corralation between ProShares Long and Global X

Given the investment horizon of 90 days ProShares Long is expected to generate 1.21 times less return on investment than Global X. But when comparing it to its historical volatility, ProShares Long OnlineShort is 1.08 times less risky than Global X. It trades about 0.08 of its potential returns per unit of risk. Global X E commerce is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,616  in Global X E commerce on September 14, 2024 and sell it today you would earn a total of  1,324  from holding Global X E commerce or generate 81.93% return on investment over 90 days.

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

ProShares Long OnlineShort  vs.  Global X E commerce

ProShares Long Onlin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Long OnlineShort are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, ProShares Long may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X E

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X E commerce are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Long and Global X

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

The idea behind ProShares Long OnlineShort and Global X E commerce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.