Correlation Between AltShares Event and ProShares Merger

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

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

Diversification Opportunities for AltShares Event and ProShares Merger

0.62

Correlation Coefficient

AltShares Event  ProShares Merger

Poor diversification

The 3 months correlation between AltShares and ProShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AltShares Event Driven ETF and ProShares Merger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Merger ETF and AltShares Event 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 AltShares Event Driven ETF are associated (or correlated) with ProShares Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Merger ETF has no effect on the direction of AltShares Event i.e., AltShares Event and ProShares Merger go up and down completely randomly.

Pair Corralation between AltShares Event and ProShares Merger

Given the investment horizon of 90 days AltShares Event is expected to generate 1.43 times less return on investment than ProShares Merger. In addition to that, AltShares Event is 1.74 times more volatile than ProShares Merger ETF. It trades about 0.11 of its total potential returns per unit of risk. ProShares Merger ETF is currently generating about 0.28 per unit of volatility. If you would invest  4,083  in ProShares Merger ETF on November 28, 2024 and sell it today you would earn a total of  106.00  from holding ProShares Merger ETF or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

AltShares Event Driven ETF  vs.  ProShares Merger ETF

AltShares Event Driven

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AltShares Event Driven ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AltShares Event is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Merger ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Merger ETF are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ProShares Merger is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AltShares Event and ProShares Merger

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

The idea behind AltShares Event Driven ETF and ProShares Merger ETF 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.