Correlation Between ProShares MSCI and ProShares MSCI

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

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

Diversification Opportunities for ProShares MSCI and ProShares MSCI

0.11

Correlation Coefficient

ProShares MSCI  ProShares MSCI

Average diversification

The 3 months correlation between ProShares and ProShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ProShares MSCI EAFE and ProShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Emerging and ProShares MSCI 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 MSCI EAFE are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Emerging has no effect on the direction of ProShares MSCI i.e., ProShares MSCI and ProShares MSCI go up and down completely randomly.

Pair Corralation between ProShares MSCI and ProShares MSCI

Given the investment horizon of 90 days ProShares MSCI EAFE is expected to generate 0.72 times more return on investment than ProShares MSCI. However, ProShares MSCI EAFE is 1.39 times less risky than ProShares MSCI. It trades about 0.03 of its potential returns per unit of risk. ProShares MSCI Emerging is currently generating about 0.0 per unit of risk. If you would invest  3,663  in ProShares MSCI EAFE on September 12, 2024 and sell it today you would earn a total of  212.00  from holding ProShares MSCI EAFE or generate 5.79% return on investment over 90 days.

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

ProShares MSCI EAFE  vs.  ProShares MSCI Emerging

ProShares MSCI EAFE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares MSCI EAFE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

ProShares MSCI Emerging

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares MSCI Emerging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, ProShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares MSCI and ProShares MSCI

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

The idea behind ProShares MSCI EAFE and ProShares MSCI Emerging 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..