Correlation Between Invesco SP and ProShares Online

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

Diversification Opportunities for Invesco SP and ProShares Online

-0.37

Correlation Coefficient

Invesco SP  ProShares Online

Very good diversification

The 3 months correlation between Invesco and ProShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP 500 and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail 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 Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of Invesco SP i.e., Invesco SP and ProShares Online go up and down completely randomly.

Pair Corralation between Invesco SP and ProShares Online

Considering the 90-day investment horizon Invesco SP 500 is expected to under-perform the ProShares Online. But the etf apears to be less risky and, when comparing its historical volatility, Invesco SP 500 is 1.44 times less risky than ProShares Online. The etf trades about -0.02 of its potential returns per unit of risk. The ProShares Online Retail is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,043  in ProShares Online Retail on September 26, 2024 and sell it today you would earn a total of  532.00  from holding ProShares Online Retail or generate 13.16% return on investment over 90 days.

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

Invesco SP 500  vs.  ProShares Online Retail

Invesco SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

ProShares Online Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Online Retail are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Invesco SP and ProShares Online

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

The idea behind Invesco SP 500 and ProShares Online Retail 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.