Correlation Between TCW ETF and ProShares Supply

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

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

Diversification Opportunities for TCW ETF and ProShares Supply

0.8

Correlation Coefficient

TCW ETF  ProShares Supply

Very poor diversification

The 3 months correlation between TCW and ProShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TCW ETF Trust and ProShares Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Supply Chain and TCW ETF 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 TCW ETF Trust are associated (or correlated) with ProShares Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Supply Chain has no effect on the direction of TCW ETF i.e., TCW ETF and ProShares Supply go up and down completely randomly.

Pair Corralation between TCW ETF and ProShares Supply

Given the investment horizon of 90 days TCW ETF Trust is expected to under-perform the ProShares Supply. In addition to that, TCW ETF is 1.59 times more volatile than ProShares Supply Chain. It trades about -0.27 of its total potential returns per unit of risk. ProShares Supply Chain is currently generating about 0.06 per unit of volatility. If you would invest  3,709  in ProShares Supply Chain on December 4, 2024 and sell it today you would earn a total of  35.80  from holding ProShares Supply Chain or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

TCW ETF Trust  vs.  ProShares Supply Chain

TCW ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCW ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

ProShares Supply Chain

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Supply Chain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with TCW ETF and ProShares Supply

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

The idea behind TCW ETF Trust and ProShares Supply Chain 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.