Correlation Between IShares Trust and ProShares Merger

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

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

Diversification Opportunities for IShares Trust and ProShares Merger

-0.49

Correlation Coefficient

IShares Trust  ProShares Merger

Very good diversification

The 3 months correlation between IShares and ProShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and ProShares Merger ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Merger ETF and IShares Trust 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 iShares Trust are associated (or correlated) with ProShares Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Merger ETF has no effect on the direction of IShares Trust i.e., IShares Trust and ProShares Merger go up and down completely randomly.

Pair Corralation between IShares Trust and ProShares Merger

Given the investment horizon of 90 days IShares Trust is expected to generate 2.31 times less return on investment than ProShares Merger. In addition to that, IShares Trust is 4.25 times more volatile than ProShares Merger ETF. It trades about 0.05 of its total potential returns per unit of risk. ProShares Merger ETF is currently generating about 0.53 per unit of volatility. If you would invest  4,095  in ProShares Merger ETF on October 23, 2024 and sell it today you would earn a total of  59.00  from holding ProShares Merger ETF or generate 1.44% return on investment over 90 days.

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

iShares Trust  vs.  ProShares Merger ETF

iShares Trust

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Merger ETF

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Merger ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ProShares Merger is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Trust and ProShares Merger

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

The idea behind iShares Trust and ProShares Merger 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.