Correlation Between ProShares Russell and CARPENTER

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

By analyzing existing cross correlation between ProShares Russell Dividend and CARPENTER TECHNOLOGY P, you can compare the effects of market volatilities on ProShares Russell and CARPENTER 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 Russell with a short position of CARPENTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Russell and CARPENTER.

Diversification Opportunities for ProShares Russell and CARPENTER

0.49

Correlation Coefficient

ProShares Russell  CARPENTER

Very weak diversification

The 3 months correlation between ProShares and CARPENTER is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Russell Dividend and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY and ProShares Russell 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 Russell Dividend are associated (or correlated) with CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of ProShares Russell i.e., ProShares Russell and CARPENTER go up and down completely randomly.

Pair Corralation between ProShares Russell and CARPENTER

Given the investment horizon of 90 days ProShares Russell Dividend is expected to generate 1.67 times more return on investment than CARPENTER. However, ProShares Russell is 1.67 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.03 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about -0.01 per unit of risk. If you would invest  4,711  in ProShares Russell Dividend on October 22, 2024 and sell it today you would earn a total of  20.30  from holding ProShares Russell Dividend or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

ProShares Russell Dividend  vs.  CARPENTER TECHNOLOGY P

ProShares Russell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Russell Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, ProShares Russell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CARPENTER TECHNOLOGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARPENTER TECHNOLOGY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Russell and CARPENTER

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

The idea behind ProShares Russell Dividend and CARPENTER TECHNOLOGY P 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.