Correlation Between ProShares Online and OShares Global

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

By analyzing existing cross correlation between ProShares Online Retail and OShares Global Internet, you can compare the effects of market volatilities on ProShares Online and OShares Global 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 Online with a short position of OShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Online and OShares Global.

Diversification Opportunities for ProShares Online and OShares Global

0.7

Correlation Coefficient

ProShares Online  OShares Global

Poor diversification

The 3 months correlation between ProShares and OShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Online Retail and OShares Global Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Global Internet and ProShares Online 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 Online Retail are associated (or correlated) with OShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Global Internet has no effect on the direction of ProShares Online i.e., ProShares Online and OShares Global go up and down completely randomly.

Pair Corralation between ProShares Online and OShares Global

Given the investment horizon of 90 days ProShares Online is expected to generate 1.84 times less return on investment than OShares Global. In addition to that, ProShares Online is 1.16 times more volatile than OShares Global Internet. It trades about 0.04 of its total potential returns per unit of risk. OShares Global Internet is currently generating about 0.09 per unit of volatility. If you would invest  2,820  in OShares Global Internet on September 26, 2024 and sell it today you would earn a total of  1,898  from holding OShares Global Internet or generate 67.3% return on investment over 90 days.

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

ProShares Online Retail  vs.  OShares Global Internet

ProShares Online Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Online Retail are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

OShares Global Internet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OShares Global Internet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, OShares Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Online and OShares Global

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

The idea behind ProShares Online Retail and OShares Global Internet 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.