Correlation Between Invesco DWA and ProShares Metaverse

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

By analyzing existing cross correlation between Invesco DWA Utilities and ProShares Metaverse ETF, you can compare the effects of market volatilities on Invesco DWA and ProShares Metaverse 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 Invesco DWA with a short position of ProShares Metaverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DWA and ProShares Metaverse.

Diversification Opportunities for Invesco DWA and ProShares Metaverse

-0.41

Correlation Coefficient

Invesco DWA  ProShares Metaverse

Very good diversification

The 3 months correlation between Invesco and ProShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DWA Utilities and ProShares Metaverse ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Metaverse ETF and Invesco DWA 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 Invesco DWA Utilities are associated (or correlated) with ProShares Metaverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Metaverse ETF has no effect on the direction of Invesco DWA i.e., Invesco DWA and ProShares Metaverse go up and down completely randomly.

Pair Corralation between Invesco DWA and ProShares Metaverse

Considering the 90-day investment horizon Invesco DWA is expected to generate 1.25 times less return on investment than ProShares Metaverse. But when comparing it to its historical volatility, Invesco DWA Utilities is 2.0 times less risky than ProShares Metaverse. It trades about 0.12 of its potential returns per unit of risk. ProShares Metaverse ETF is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,517  in ProShares Metaverse ETF on October 21, 2024 and sell it today you would earn a total of  753.00  from holding ProShares Metaverse ETF or generate 16.67% return on investment over 90 days.

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

Invesco DWA Utilities  vs.  ProShares Metaverse ETF

Invesco DWA Utilities

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco DWA Utilities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

ProShares Metaverse ETF

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Metaverse ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ProShares Metaverse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Invesco DWA and ProShares Metaverse

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

The idea behind Invesco DWA Utilities and ProShares Metaverse ETF 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.