Correlation Between ProShares and United States

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

By analyzing existing cross correlation between ProShares K 1 Free and United States 12, you can compare the effects of market volatilities on ProShares and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and United States.

Diversification Opportunities for ProShares and United States

1.0

Correlation Coefficient

ProShares  United States

No risk reduction

The 3 months correlation between ProShares and United is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares K 1 Free and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 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 K 1 Free are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of ProShares i.e., ProShares and United States go up and down completely randomly.

Pair Corralation between ProShares and United States

Given the investment horizon of 90 days ProShares K 1 Free is expected to generate 1.01 times more return on investment than United States. However, ProShares is 1.01 times more volatile than United States 12. It trades about 0.51 of its potential returns per unit of risk. United States 12 is currently generating about 0.51 per unit of risk. If you would invest  4,186  in ProShares K 1 Free on October 7, 2024 and sell it today you would earn a total of  333.00  from holding ProShares K 1 Free or generate 7.96% return on investment over 90 days.

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

ProShares K 1 Free  vs.  United States 12

ProShares K 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares K 1 Free has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, ProShares is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

United States 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States 12 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, United States is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares and United States

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

The idea behind ProShares K 1 Free and United States 12 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.