Correlation Between IShares JP and ProShares Investment

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

By analyzing existing cross correlation between iShares JP Morgan and ProShares Investment GradeInterest, you can compare the effects of market volatilities on IShares JP and ProShares Investment 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 IShares JP with a short position of ProShares Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and ProShares Investment.

Diversification Opportunities for IShares JP and ProShares Investment

0.67

Correlation Coefficient

IShares JP  ProShares Investment

Poor diversification

The 3 months correlation between IShares and ProShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and ProShares Investment GradeInte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Investment and IShares JP 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 iShares JP Morgan are associated (or correlated) with ProShares Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Investment has no effect on the direction of IShares JP i.e., IShares JP and ProShares Investment go up and down completely randomly.

Pair Corralation between IShares JP and ProShares Investment

Given the investment horizon of 90 days iShares JP Morgan is expected to generate 1.78 times more return on investment than ProShares Investment. However, IShares JP is 1.78 times more volatile than ProShares Investment GradeInterest. It trades about 0.14 of its potential returns per unit of risk. ProShares Investment GradeInterest is currently generating about 0.18 per unit of risk. If you would invest  3,066  in iShares JP Morgan on September 19, 2024 and sell it today you would earn a total of  807.00  from holding iShares JP Morgan or generate 26.32% return on investment over 90 days.

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

iShares JP Morgan  vs.  ProShares Investment GradeInte

iShares JP Morgan

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares JP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares Investment

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Investment GradeInterest are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares JP and ProShares Investment

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

The idea behind iShares JP Morgan and ProShares Investment GradeInterest 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.