Correlation Between IREIT MarketVector and ProShares MSCI

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

By analyzing existing cross correlation between iREIT MarketVector and ProShares MSCI EAFE, you can compare the effects of market volatilities on IREIT MarketVector and ProShares MSCI 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 IREIT MarketVector with a short position of ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and ProShares MSCI.

Diversification Opportunities for IREIT MarketVector and ProShares MSCI

0.25

Correlation Coefficient

IREIT MarketVector  ProShares MSCI

Modest diversification

The 3 months correlation between IREIT and ProShares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and ProShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI EAFE and IREIT MarketVector 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 iREIT MarketVector are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI EAFE has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and ProShares MSCI go up and down completely randomly.

Pair Corralation between IREIT MarketVector and ProShares MSCI

Given the investment horizon of 90 days IREIT MarketVector is expected to generate 50.89 times less return on investment than ProShares MSCI. In addition to that, IREIT MarketVector is 1.36 times more volatile than ProShares MSCI EAFE. It trades about 0.0 of its total potential returns per unit of risk. ProShares MSCI EAFE is currently generating about 0.13 per unit of volatility. If you would invest  3,701  in ProShares MSCI EAFE on December 29, 2024 and sell it today you would earn a total of  218.00  from holding ProShares MSCI EAFE or generate 5.89% return on investment over 90 days.

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

iREIT MarketVector  vs.  ProShares MSCI EAFE

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IREIT MarketVector is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares MSCI EAFE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares MSCI EAFE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ProShares MSCI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IREIT MarketVector and ProShares MSCI

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

The idea behind iREIT MarketVector and ProShares MSCI EAFE 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..