Correlation Between ProShares and Exchange Listed

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Can any of the company-specific risk be diversified away by investing in both ProShares and Exchange Listed 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 and Exchange Listed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP 500 and Exchange Listed Funds, you can compare the effects of market volatilities on ProShares and Exchange Listed 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 with a short position of Exchange Listed. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Exchange Listed.

Diversification Opportunities for ProShares and Exchange Listed

ProSharesExchangeDiversified AwayProSharesExchangeDiversified Away100%
0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between ProShares and Exchange is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Exchange Listed Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Listed Funds and ProShares 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 SP 500 are associated (or correlated) with Exchange Listed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Listed Funds has no effect on the direction of ProShares i.e., ProShares and Exchange Listed go up and down completely randomly.

Pair Corralation between ProShares and Exchange Listed

Given the investment horizon of 90 days ProShares SP 500 is expected to generate 1.11 times more return on investment than Exchange Listed. However, ProShares is 1.11 times more volatile than Exchange Listed Funds. It trades about 0.08 of its potential returns per unit of risk. Exchange Listed Funds is currently generating about 0.03 per unit of risk. If you would invest  6,285  in ProShares SP 500 on November 15, 2024 and sell it today you would earn a total of  229.00  from holding ProShares SP 500 or generate 3.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ProShares SP 500  vs.  Exchange Listed Funds

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -3-2-10123
JavaScript chart by amCharts 3.21.15SPXE SSPY
       Timeline  
ProShares SP 500 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ProShares is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb62.56363.56464.56565.5
Exchange Listed Funds 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Listed Funds are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Exchange Listed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7879808182

ProShares and Exchange Listed Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.37-1.77-1.17-0.570.01020.611.221.842.45 0.20.40.60.8
JavaScript chart by amCharts 3.21.15SPXE SSPY
       Returns  

Pair Trading with ProShares and Exchange Listed

The main advantage of trading using opposite ProShares and Exchange Listed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Exchange Listed 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 Exchange Listed will offset losses from the drop in Exchange Listed's long position.
The idea behind ProShares SP 500 and Exchange Listed Funds 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.
Check out your portfolio center.
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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