Correlation Between ProShares and ProShares MSCI

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

Diversification Opportunities for ProShares and ProShares MSCI

ProSharesProSharesDiversified AwayProSharesProSharesDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between ProShares and ProShares is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP Technology and ProShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Emerging 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 Technology are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Emerging has no effect on the direction of ProShares i.e., ProShares and ProShares MSCI go up and down completely randomly.

Pair Corralation between ProShares and ProShares MSCI

Considering the 90-day investment horizon ProShares is expected to generate 1.29 times less return on investment than ProShares MSCI. But when comparing it to its historical volatility, ProShares SP Technology is 1.83 times less risky than ProShares MSCI. It trades about 0.08 of its potential returns per unit of risk. ProShares MSCI Emerging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,190  in ProShares MSCI Emerging on September 18, 2024 and sell it today you would earn a total of  214.00  from holding ProShares MSCI Emerging or generate 5.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

ProShares SP Technology  vs.  ProShares MSCI Emerging

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 05101520
JavaScript chart by amCharts 3.21.15TDV EMDV
       Timeline  
ProShares SP Technology 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, ProShares is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7576777879
ProShares MSCI Emerging 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares MSCI Emerging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, ProShares MSCI is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec434445464748495051

ProShares and ProShares MSCI Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.94-2.2-1.46-0.730.01280.751.522.293.05 0.10.20.30.4
JavaScript chart by amCharts 3.21.15TDV EMDV
       Returns  

Pair Trading with ProShares and ProShares MSCI

The main advantage of trading using opposite ProShares and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, ProShares MSCI 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 MSCI will offset losses from the drop in ProShares MSCI's long position.
The idea behind ProShares SP Technology and ProShares MSCI Emerging 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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