Correlation Between ProShares Global and SPDR Kensho

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

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

Diversification Opportunities for ProShares Global and SPDR Kensho

0.39

Correlation Coefficient

ProShares Global  SPDR Kensho

Weak diversification

The 3 months correlation between ProShares and SPDR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Global Listed and SPDR Kensho Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Clean and ProShares Global 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 Global Listed are associated (or correlated) with SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Clean has no effect on the direction of ProShares Global i.e., ProShares Global and SPDR Kensho go up and down completely randomly.

Pair Corralation between ProShares Global and SPDR Kensho

Considering the 90-day investment horizon ProShares Global Listed is expected to generate 0.39 times more return on investment than SPDR Kensho. However, ProShares Global Listed is 2.54 times less risky than SPDR Kensho. It trades about 0.01 of its potential returns per unit of risk. SPDR Kensho Clean is currently generating about -0.04 per unit of risk. If you would invest  2,827  in ProShares Global Listed on September 22, 2024 and sell it today you would earn a total of  6.00  from holding ProShares Global Listed or generate 0.21% return on investment over 90 days.

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

ProShares Global Listed  vs.  SPDR Kensho Clean

ProShares Global Listed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Global Listed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, ProShares Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR Kensho Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Kensho Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPDR Kensho is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Global and SPDR Kensho

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

The idea behind ProShares Global Listed and SPDR Kensho Clean 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.