Correlation Between ETRACS Quarterly and ProShares

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

By analyzing existing cross correlation between ETRACS Quarterly Pay and ProShares SP Kensho, you can compare the effects of market volatilities on ETRACS Quarterly and ProShares 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 ETRACS Quarterly with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Quarterly and ProShares.

Diversification Opportunities for ETRACS Quarterly and ProShares

-0.25

Correlation Coefficient

ETRACS Quarterly  ProShares

Very good diversification

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

Pair Corralation between ETRACS Quarterly and ProShares

Given the investment horizon of 90 days ETRACS Quarterly Pay is expected to generate 0.97 times more return on investment than ProShares. However, ETRACS Quarterly Pay is 1.03 times less risky than ProShares. It trades about 0.19 of its potential returns per unit of risk. ProShares SP Kensho is currently generating about -0.12 per unit of risk. If you would invest  5,768  in ETRACS Quarterly Pay on December 30, 2024 and sell it today you would earn a total of  1,110  from holding ETRACS Quarterly Pay or generate 19.24% return on investment over 90 days.

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

ETRACS Quarterly Pay  vs.  ProShares SP Kensho

ETRACS Quarterly Pay

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Quarterly Pay are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ETRACS Quarterly reported solid returns over the last few months and may actually be approaching a breakup point.

ProShares SP Kensho

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares SP Kensho has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with ETRACS Quarterly and ProShares

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

The idea behind ETRACS Quarterly Pay and ProShares SP Kensho 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..