Correlation Between FlexShares Morningstar and ProShares

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

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

Diversification Opportunities for FlexShares Morningstar and ProShares

0.43

Correlation Coefficient

FlexShares Morningstar  ProShares

Very weak diversification

The 3 months correlation between FlexShares and ProShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Morningstar Global and ProShares DJ Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares DJ Brookfield and FlexShares Morningstar 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 FlexShares Morningstar Global are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares DJ Brookfield has no effect on the direction of FlexShares Morningstar i.e., FlexShares Morningstar and ProShares go up and down completely randomly.

Pair Corralation between FlexShares Morningstar and ProShares

Given the investment horizon of 90 days FlexShares Morningstar Global is expected to under-perform the ProShares. In addition to that, FlexShares Morningstar is 1.13 times more volatile than ProShares DJ Brookfield. It trades about -0.3 of its total potential returns per unit of risk. ProShares DJ Brookfield is currently generating about -0.17 per unit of volatility. If you would invest  5,069  in ProShares DJ Brookfield on October 9, 2024 and sell it today you would lose (141.00) from holding ProShares DJ Brookfield or give up 2.78% of portfolio value over 90 days.

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

FlexShares Morningstar Global  vs.  ProShares DJ Brookfield

FlexShares Morningstar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Morningstar Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

ProShares DJ Brookfield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FlexShares Morningstar and ProShares

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

The idea behind FlexShares Morningstar Global and ProShares DJ Brookfield 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.