Correlation Between IShares Semiconductor and ProShares Big

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

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

Diversification Opportunities for IShares Semiconductor and ProShares Big

0.23

Correlation Coefficient

IShares Semiconductor  ProShares Big

Modest diversification

The 3 months correlation between IShares and ProShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and ProShares Big Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Big Data and IShares Semiconductor 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 iShares Semiconductor ETF are associated (or correlated) with ProShares Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Big Data has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and ProShares Big go up and down completely randomly.

Pair Corralation between IShares Semiconductor and ProShares Big

Given the investment horizon of 90 days iShares Semiconductor ETF is expected to generate 1.26 times more return on investment than ProShares Big. However, IShares Semiconductor is 1.26 times more volatile than ProShares Big Data. It trades about -0.06 of its potential returns per unit of risk. ProShares Big Data is currently generating about -0.11 per unit of risk. If you would invest  22,237  in iShares Semiconductor ETF on December 4, 2024 and sell it today you would lose (2,010) from holding iShares Semiconductor ETF or give up 9.04% of portfolio value over 90 days.

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

iShares Semiconductor ETF  vs.  ProShares Big Data

iShares Semiconductor ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Semiconductor ETF 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

ProShares Big Data

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Big Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares Semiconductor and ProShares Big

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

The idea behind iShares Semiconductor ETF and ProShares Big Data 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.