Correlation Between Global X and ProShares

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

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

Diversification Opportunities for Global X and ProShares

0.78

Correlation Coefficient

Global X  ProShares

Poor diversification

The 3 months correlation between Global and ProShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and ProShares On Demand ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares On Demand 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 Thematic 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 On Demand has no effect on the direction of Global X i.e., Global X and ProShares go up and down completely randomly.

Pair Corralation between Global X and ProShares

Given the investment horizon of 90 days Global X is expected to generate 1.95 times less return on investment than ProShares. In addition to that, Global X is 1.1 times more volatile than ProShares On Demand ETF. It trades about 0.09 of its total potential returns per unit of risk. ProShares On Demand ETF is currently generating about 0.19 per unit of volatility. If you would invest  2,986  in ProShares On Demand ETF on September 15, 2024 and sell it today you would earn a total of  445.00  from holding ProShares On Demand ETF or generate 14.9% return on investment over 90 days.

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

Global X Thematic  vs.  ProShares On Demand ETF

Global X Thematic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Thematic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ProShares On Demand

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares On Demand ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ProShares exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global X and ProShares

The main advantage of trading using opposite Global X and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Thematic and ProShares On Demand 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.