Correlation Between ProShares Trust and Fidelity Advantage

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

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

Diversification Opportunities for ProShares Trust and Fidelity Advantage

1.0

Correlation Coefficient

ProShares Trust  Fidelity Advantage

No risk reduction

The 3 months correlation between ProShares and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Fidelity Advantage Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage Ether and ProShares Trust 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 Trust are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage Ether has no effect on the direction of ProShares Trust i.e., ProShares Trust and Fidelity Advantage go up and down completely randomly.

Pair Corralation between ProShares Trust and Fidelity Advantage

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Fidelity Advantage. In addition to that, ProShares Trust is 1.01 times more volatile than Fidelity Advantage Ether. It trades about -0.36 of its total potential returns per unit of risk. Fidelity Advantage Ether is currently generating about -0.35 per unit of volatility. If you would invest  4,050  in Fidelity Advantage Ether on October 16, 2024 and sell it today you would lose (964.00) from holding Fidelity Advantage Ether or give up 23.8% of portfolio value over 90 days.

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

ProShares Trust  vs.  Fidelity Advantage Ether

ProShares Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ProShares Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advantage Ether

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Ether are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Fidelity Advantage demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Trust and Fidelity Advantage

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

The idea behind ProShares Trust and Fidelity Advantage Ether 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.