Correlation Between Global X and ProShares MSCI

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

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

Diversification Opportunities for Global X and ProShares MSCI

0.13

Correlation Coefficient

Global X  ProShares MSCI

Average diversification

The 3 months correlation between Global and ProShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI 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 Global X 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 Global X MSCI 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 Global X i.e., Global X and ProShares MSCI go up and down completely randomly.

Pair Corralation between Global X and ProShares MSCI

Given the investment horizon of 90 days Global X MSCI is expected to generate 0.84 times more return on investment than ProShares MSCI. However, Global X MSCI is 1.19 times less risky than ProShares MSCI. It trades about 0.07 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  1,214  in Global X MSCI on December 2, 2024 and sell it today you would earn a total of  289.00  from holding Global X MSCI or generate 23.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.46%
Values	Daily Returns

Global X MSCI  vs.  ProShares MSCI Emerging

Global X MSCI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ProShares MSCI Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares MSCI Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, ProShares MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global X and ProShares MSCI

The main advantage of trading using opposite Global X and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X MSCI 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.