Correlation Between ProShares Hedge and Global X

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

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

Diversification Opportunities for ProShares Hedge and Global X

0.63

Correlation Coefficient

ProShares Hedge  Global X

Poor diversification

The 3 months correlation between ProShares and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Hedge Replication and Global X NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X NASDAQ and ProShares Hedge 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 Hedge Replication are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X NASDAQ has no effect on the direction of ProShares Hedge i.e., ProShares Hedge and Global X go up and down completely randomly.

Pair Corralation between ProShares Hedge and Global X

Considering the 90-day investment horizon ProShares Hedge Replication is expected to generate 0.36 times more return on investment than Global X. However, ProShares Hedge Replication is 2.77 times less risky than Global X. It trades about 0.03 of its potential returns per unit of risk. Global X NASDAQ is currently generating about -0.13 per unit of risk. If you would invest  4,926  in ProShares Hedge Replication on December 20, 2024 and sell it today you would earn a total of  23.00  from holding ProShares Hedge Replication or generate 0.47% return on investment over 90 days.

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

ProShares Hedge Replication  vs.  Global X NASDAQ

ProShares Hedge Repl

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Hedge Replication are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ProShares Hedge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X NASDAQ

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ProShares Hedge and Global X

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

The idea behind ProShares Hedge Replication and Global X NASDAQ 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.