Correlation Between ProShares and Fidelity Blue

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

By analyzing existing cross correlation between ProShares SP 500 and Fidelity Blue Chip, you can compare the effects of market volatilities on ProShares and Fidelity Blue 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 ProShares with a short position of Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Fidelity Blue.

Diversification Opportunities for ProShares and Fidelity Blue

0.77

Correlation Coefficient

ProShares  Fidelity Blue

Poor diversification

The 3 months correlation between ProShares and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and ProShares 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 ProShares SP 500 are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of ProShares i.e., ProShares and Fidelity Blue go up and down completely randomly.

Pair Corralation between ProShares and Fidelity Blue

Given the investment horizon of 90 days ProShares SP 500 is expected to under-perform the Fidelity Blue. But the etf apears to be less risky and, when comparing its historical volatility, ProShares SP 500 is 1.11 times less risky than Fidelity Blue. The etf trades about -0.02 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,230  in Fidelity Blue Chip on September 15, 2024 and sell it today you would earn a total of  32.00  from holding Fidelity Blue Chip or generate 0.99% return on investment over 90 days.

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

ProShares SP 500  vs.  Fidelity Blue Chip

ProShares SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, ProShares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Fidelity Blue Chip

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Fidelity Blue is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares and Fidelity Blue

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

The idea behind ProShares SP 500 and Fidelity Blue Chip 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.