Correlation Between Invesco SP and ProShares Equities

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

By analyzing existing cross correlation between Invesco SP 500 and ProShares Equities for, you can compare the effects of market volatilities on Invesco SP and ProShares Equities 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 SP with a short position of ProShares Equities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and ProShares Equities.

Diversification Opportunities for Invesco SP and ProShares Equities

0.79

Correlation Coefficient

Invesco SP  ProShares Equities

Poor diversification

The 3 months correlation between Invesco and ProShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and ProShares Equities for in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Equities for and Invesco SP 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 SP 500 are associated (or correlated) with ProShares Equities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Equities for has no effect on the direction of Invesco SP i.e., Invesco SP and ProShares Equities go up and down completely randomly.

Pair Corralation between Invesco SP and ProShares Equities

Considering the 90-day investment horizon Invesco SP is expected to generate 1.9 times less return on investment than ProShares Equities. In addition to that, Invesco SP is 1.03 times more volatile than ProShares Equities for. It trades about 0.05 of its total potential returns per unit of risk. ProShares Equities for is currently generating about 0.11 per unit of volatility. If you would invest  5,626  in ProShares Equities for on December 29, 2024 and sell it today you would earn a total of  309.00  from holding ProShares Equities for or generate 5.49% return on investment over 90 days.

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

Invesco SP 500  vs.  ProShares Equities for

Invesco SP 500

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Invesco SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ProShares Equities for

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Equities for are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ProShares Equities 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 Invesco SP and ProShares Equities

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

The idea behind Invesco SP 500 and ProShares Equities for 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.