Correlation Between IShares Technology and ProShares Big

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

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

Diversification Opportunities for IShares Technology and ProShares Big

0.64

Correlation Coefficient

IShares Technology  ProShares Big

Poor diversification

The 3 months correlation between IShares and ProShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and ProShares Big Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Big Data and IShares Technology 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 Technology ETF are associated (or correlated) with ProShares Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Big Data has no effect on the direction of IShares Technology i.e., IShares Technology and ProShares Big go up and down completely randomly.

Pair Corralation between IShares Technology and ProShares Big

Considering the 90-day investment horizon iShares Technology ETF is expected to generate 0.91 times more return on investment than ProShares Big. However, iShares Technology ETF is 1.1 times less risky than ProShares Big. It trades about -0.1 of its potential returns per unit of risk. ProShares Big Data is currently generating about -0.11 per unit of risk. If you would invest  16,546  in iShares Technology ETF on December 4, 2024 and sell it today you would lose (1,554) from holding iShares Technology ETF or give up 9.39% of portfolio value over 90 days.

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

iShares Technology ETF  vs.  ProShares Big Data

iShares Technology ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

ProShares Big Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Big Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares Technology and ProShares Big

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

The idea behind iShares Technology ETF and ProShares Big Data 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.