Correlation Between ProShares Decline and ProShares Online

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

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

Diversification Opportunities for ProShares Decline and ProShares Online

-0.61

Correlation Coefficient

ProShares Decline  ProShares Online

Excellent diversification

The 3 months correlation between ProShares and ProShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Decline of and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail and ProShares Decline 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 Decline of are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of ProShares Decline i.e., ProShares Decline and ProShares Online go up and down completely randomly.

Pair Corralation between ProShares Decline and ProShares Online

Given the investment horizon of 90 days ProShares Decline of is expected to under-perform the ProShares Online. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Decline of is 1.2 times less risky than ProShares Online. The etf trades about -0.07 of its potential returns per unit of risk. The ProShares Online Retail is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,131  in ProShares Online Retail on September 15, 2024 and sell it today you would earn a total of  614.00  from holding ProShares Online Retail or generate 14.86% return on investment over 90 days.

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

ProShares Decline of  vs.  ProShares Online Retail

ProShares Decline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Decline of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ProShares Decline is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares Online Retail

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Online Retail are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, ProShares Online displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Decline and ProShares Online

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

The idea behind ProShares Decline of and ProShares Online Retail 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.