Correlation Between FT Vest and ProShares

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

By analyzing existing cross correlation between FT Vest Equity and ProShares SP 500, you can compare the effects of market volatilities on FT Vest 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 FT Vest with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and ProShares.

Diversification Opportunities for FT Vest and ProShares

-0.04

Correlation Coefficient

FT Vest  ProShares

Good diversification

The 3 months correlation between DHDG and ProShares is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and FT Vest 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 FT Vest Equity 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 SP 500 has no effect on the direction of FT Vest i.e., FT Vest and ProShares go up and down completely randomly.

Pair Corralation between FT Vest and ProShares

Given the investment horizon of 90 days FT Vest is expected to generate 1.36 times less return on investment than ProShares. But when comparing it to its historical volatility, FT Vest Equity is 1.95 times less risky than ProShares. It trades about 0.21 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,529  in ProShares SP 500 on September 12, 2024 and sell it today you would earn a total of  75.00  from holding ProShares SP 500 or generate 1.66% return on investment over 90 days.

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

FT Vest Equity  vs.  ProShares SP 500

FT Vest Equity

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Equity are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares SP 500

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FT Vest and ProShares

The main advantage of trading using opposite FT Vest and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest 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 FT Vest Equity and ProShares SP 500 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.