Correlation Between ProShares and ProShares

Can any of the company-specific risk be diversified away by investing in both ProShares 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 ProShares and ProShares 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 ProShares SP MidCap, you can compare the effects of market volatilities on ProShares 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 ProShares with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and ProShares.

Diversification Opportunities for ProShares and ProShares

0.52

Correlation Coefficient

ProShares  ProShares

Very weak diversification

The 3 months correlation between ProShares and ProShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap 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 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 MidCap has no effect on the direction of ProShares i.e., ProShares and ProShares go up and down completely randomly.

Pair Corralation between ProShares and ProShares

Given the investment horizon of 90 days ProShares is expected to generate 1.22 times less return on investment than ProShares. But when comparing it to its historical volatility, ProShares SP 500 is 1.33 times less risky than ProShares. It trades about 0.04 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,931  in ProShares SP MidCap on September 29, 2024 and sell it today you would earn a total of  1,153  from holding ProShares SP MidCap or generate 16.64% return on investment over 90 days.

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

ProShares SP 500  vs.  ProShares SP MidCap

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 recent stock price mess, may contribute to short-term losses for the institutional investors.

ProShares SP MidCap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ProShares and ProShares

The main advantage of trading using opposite ProShares and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares 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 ProShares SP 500 and ProShares SP MidCap 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.