Correlation Between Global X and ProShares Long

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

By analyzing existing cross correlation between Global X FinTech and ProShares Long OnlineShort, you can compare the effects of market volatilities on Global X and ProShares Long 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 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and ProShares Long.

Diversification Opportunities for Global X and ProShares Long

0.2

Correlation Coefficient

Global X  ProShares Long

Modest diversification

The 3 months correlation between Global and ProShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global X FinTech and ProShares Long OnlineShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Long Onlin 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 FinTech are associated (or correlated) with ProShares Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Long Onlin has no effect on the direction of Global X i.e., Global X and ProShares Long go up and down completely randomly.

Pair Corralation between Global X and ProShares Long

Given the investment horizon of 90 days Global X FinTech is expected to generate 1.45 times more return on investment than ProShares Long. However, Global X is 1.45 times more volatile than ProShares Long OnlineShort. It trades about 0.11 of its potential returns per unit of risk. ProShares Long OnlineShort is currently generating about -0.04 per unit of risk. If you would invest  2,856  in Global X FinTech on October 11, 2024 and sell it today you would earn a total of  301.00  from holding Global X FinTech or generate 10.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Global X FinTech  vs.  ProShares Long OnlineShort

Global X FinTech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X FinTech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ProShares Long Onlin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global X and ProShares Long

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

The idea behind Global X FinTech and ProShares Long OnlineShort 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.