Correlation Between ProShares and ProShares Big

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

By analyzing existing cross correlation between ProShares On Demand ETF and ProShares Big Data, you can compare the effects of market volatilities on ProShares and ProShares Big 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 Big. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and ProShares Big.

Diversification Opportunities for ProShares and ProShares Big

0.43

Correlation Coefficient

ProShares  ProShares Big

Very weak diversification

The 3 months correlation between ProShares and ProShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ProShares On Demand ETF and ProShares Big Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Big Data 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 On Demand ETF are associated (or correlated) with ProShares Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Big Data has no effect on the direction of ProShares i.e., ProShares and ProShares Big go up and down completely randomly.

Pair Corralation between ProShares and ProShares Big

Considering the 90-day investment horizon ProShares On Demand ETF is expected to generate 0.71 times more return on investment than ProShares Big. However, ProShares On Demand ETF is 1.41 times less risky than ProShares Big. It trades about -0.01 of its potential returns per unit of risk. ProShares Big Data is currently generating about -0.11 per unit of risk. If you would invest  3,528  in ProShares On Demand ETF on December 4, 2024 and sell it today you would lose (47.00) from holding ProShares On Demand ETF or give up 1.33% of portfolio value over 90 days.

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

ProShares On Demand ETF  vs.  ProShares Big Data

ProShares On Demand

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares On Demand ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ProShares is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Big Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Big Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with ProShares and ProShares Big

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

The idea behind ProShares On Demand ETF and ProShares Big Data 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .