Correlation Between ProShares and JPMorgan Climate

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

Diversification Opportunities for ProShares and JPMorgan Climate

-0.35

Correlation Coefficient

ProShares  JPMorgan Climate

Very good diversification

The 3 months correlation between ProShares and JPMorgan is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ProShares On Demand ETF and JPMorgan Climate Change in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Climate Change 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 JPMorgan Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Climate Change has no effect on the direction of ProShares i.e., ProShares and JPMorgan Climate go up and down completely randomly.

Pair Corralation between ProShares and JPMorgan Climate

Considering the 90-day investment horizon ProShares On Demand ETF is expected to generate 1.44 times more return on investment than JPMorgan Climate. However, ProShares is 1.44 times more volatile than JPMorgan Climate Change. It trades about 0.19 of its potential returns per unit of risk. JPMorgan Climate Change is currently generating about -0.05 per unit of risk. If you would invest  2,986  in ProShares On Demand ETF on September 15, 2024 and sell it today you would earn a total of  445.00  from holding ProShares On Demand ETF or generate 14.9% return on investment over 90 days.

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

ProShares On Demand ETF  vs.  JPMorgan Climate Change

ProShares On Demand

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares On Demand ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ProShares exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan Climate Change

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan Climate Change has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, JPMorgan Climate is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares and JPMorgan Climate

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

The idea behind ProShares On Demand ETF and JPMorgan Climate Change 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.