Correlation Between ProShares Online and Pacer Benchmark

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

Diversification Opportunities for ProShares Online and Pacer Benchmark

0.18

Correlation Coefficient

ProShares Online  Pacer Benchmark

Average diversification

The 3 months correlation between ProShares and Pacer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Online Retail and Pacer Benchmark Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Benchmark Data 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 Pacer Benchmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Benchmark Data has no effect on the direction of ProShares Online i.e., ProShares Online and Pacer Benchmark go up and down completely randomly.

Pair Corralation between ProShares Online and Pacer Benchmark

Given the investment horizon of 90 days ProShares Online Retail is expected to under-perform the Pacer Benchmark. In addition to that, ProShares Online is 1.39 times more volatile than Pacer Benchmark Data. It trades about -0.02 of its total potential returns per unit of risk. Pacer Benchmark Data is currently generating about -0.01 per unit of volatility. If you would invest  2,972  in Pacer Benchmark Data on December 29, 2024 and sell it today you would lose (45.00) from holding Pacer Benchmark Data or give up 1.51% of portfolio value over 90 days.

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

ProShares Online Retail  vs.  Pacer Benchmark Data

ProShares Online Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Online Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pacer Benchmark Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Benchmark Data has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Pacer Benchmark 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 Online and Pacer Benchmark

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

The idea behind ProShares Online Retail and Pacer Benchmark 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.