Correlation Between IShares Consumer and ProShares Equities

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

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

Diversification Opportunities for IShares Consumer and ProShares Equities

0.86

Correlation Coefficient

IShares Consumer  ProShares Equities

Very poor diversification

The 3 months correlation between IShares and ProShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and ProShares Equities for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Equities for and IShares Consumer 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 Consumer Discretionary are associated (or correlated) with ProShares Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Equities for has no effect on the direction of IShares Consumer i.e., IShares Consumer and ProShares Equities go up and down completely randomly.

Pair Corralation between IShares Consumer and ProShares Equities

Considering the 90-day investment horizon iShares Consumer Discretionary is expected to generate 0.89 times more return on investment than ProShares Equities. However, iShares Consumer Discretionary is 1.12 times less risky than ProShares Equities. It trades about 0.35 of its potential returns per unit of risk. ProShares Equities for is currently generating about 0.14 per unit of risk. If you would invest  8,420  in iShares Consumer Discretionary on September 12, 2024 and sell it today you would earn a total of  1,599  from holding iShares Consumer Discretionary or generate 18.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

iShares Consumer Discretionary  vs.  ProShares Equities for

iShares Consumer Dis

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Consumer Discretionary are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, IShares Consumer exhibited solid returns over the last few months and may actually be approaching a breakup point.

ProShares Equities for

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Equities for are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, ProShares Equities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Consumer and ProShares Equities

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

The idea behind iShares Consumer Discretionary and ProShares Equities for 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.