Correlation Between SPDR Kensho and ProShares

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

By analyzing existing cross correlation between SPDR Kensho Clean and ProShares DJ Brookfield, you can compare the effects of market volatilities on SPDR Kensho 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 SPDR Kensho with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Kensho and ProShares.

Diversification Opportunities for SPDR Kensho and ProShares

0.44

Correlation Coefficient

SPDR Kensho  ProShares

Very weak diversification

The 3 months correlation between SPDR and ProShares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Kensho Clean and ProShares DJ Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares DJ Brookfield and SPDR Kensho 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 SPDR Kensho Clean 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 DJ Brookfield has no effect on the direction of SPDR Kensho i.e., SPDR Kensho and ProShares go up and down completely randomly.

Pair Corralation between SPDR Kensho and ProShares

Given the investment horizon of 90 days SPDR Kensho Clean is expected to under-perform the ProShares. In addition to that, SPDR Kensho is 2.41 times more volatile than ProShares DJ Brookfield. It trades about -0.02 of its total potential returns per unit of risk. ProShares DJ Brookfield is currently generating about 0.04 per unit of volatility. If you would invest  4,341  in ProShares DJ Brookfield on October 6, 2024 and sell it today you would earn a total of  617.00  from holding ProShares DJ Brookfield or generate 14.21% return on investment over 90 days.

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

SPDR Kensho Clean  vs.  ProShares DJ Brookfield

SPDR Kensho Clean

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Kensho Clean are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPDR Kensho is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares DJ Brookfield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares DJ Brookfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, ProShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR Kensho and ProShares

The main advantage of trading using opposite SPDR Kensho and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Kensho 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 SPDR Kensho Clean and ProShares DJ Brookfield 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.