Correlation Between ProShares Inflation and FolioBeyond Rising

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

By analyzing existing cross correlation between ProShares Inflation Expectations and FolioBeyond Rising Rates, you can compare the effects of market volatilities on ProShares Inflation and FolioBeyond Rising 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 Inflation with a short position of FolioBeyond Rising. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Inflation and FolioBeyond Rising.

Diversification Opportunities for ProShares Inflation and FolioBeyond Rising

0.43

Correlation Coefficient

ProShares Inflation  FolioBeyond Rising

Very weak diversification

The 3 months correlation between ProShares and FolioBeyond is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Inflation Expectatio and FolioBeyond Rising Rates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FolioBeyond Rising Rates and ProShares Inflation 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 Inflation Expectations are associated (or correlated) with FolioBeyond Rising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FolioBeyond Rising Rates has no effect on the direction of ProShares Inflation i.e., ProShares Inflation and FolioBeyond Rising go up and down completely randomly.

Pair Corralation between ProShares Inflation and FolioBeyond Rising

Given the investment horizon of 90 days ProShares Inflation Expectations is expected to under-perform the FolioBeyond Rising. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Inflation Expectations is 1.03 times less risky than FolioBeyond Rising. The etf trades about -0.01 of its potential returns per unit of risk. The FolioBeyond Rising Rates is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,606  in FolioBeyond Rising Rates on December 31, 2024 and sell it today you would earn a total of  44.00  from holding FolioBeyond Rising Rates or generate 1.22% return on investment over 90 days.

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

ProShares Inflation Expectatio  vs.  FolioBeyond Rising Rates

ProShares Inflation

Risk-Adjusted Performance

Very Weak

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

FolioBeyond Rising Rates

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FolioBeyond Rising Rates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FolioBeyond Rising is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProShares Inflation and FolioBeyond Rising

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

The idea behind ProShares Inflation Expectations and FolioBeyond Rising Rates 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.