Correlation Between Nasdaq and ProShares High

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

By analyzing existing cross correlation between Nasdaq Inc and ProShares High YieldInterest, you can compare the effects of market volatilities on Nasdaq and ProShares High 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 Nasdaq with a short position of ProShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and ProShares High.

Diversification Opportunities for Nasdaq and ProShares High

0.42

Correlation Coefficient

Nasdaq  ProShares High

Very weak diversification

The 3 months correlation between Nasdaq and ProShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and ProShares High YieldInterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares High Yield and Nasdaq 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 Nasdaq Inc are associated (or correlated) with ProShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares High Yield has no effect on the direction of Nasdaq i.e., Nasdaq and ProShares High go up and down completely randomly.

Pair Corralation between Nasdaq and ProShares High

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the ProShares High. In addition to that, Nasdaq is 1.84 times more volatile than ProShares High YieldInterest. It trades about -0.31 of its total potential returns per unit of risk. ProShares High YieldInterest is currently generating about -0.06 per unit of volatility. If you would invest  6,547  in ProShares High YieldInterest on December 10, 2024 and sell it today you would lose (72.00) from holding ProShares High YieldInterest or give up 1.1% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  ProShares High YieldInterest

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ProShares High Yield

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares High YieldInterest are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares High is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and ProShares High

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

The idea behind Nasdaq Inc and ProShares High YieldInterest 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 Anywhere module to track or share privately all of your investments from the convenience of any device.