Correlation Between Manager Directed and ProShares Russell

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

By analyzing existing cross correlation between Manager Directed Portfolios and ProShares Russell 2000, you can compare the effects of market volatilities on Manager Directed and ProShares Russell 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 Manager Directed with a short position of ProShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manager Directed and ProShares Russell.

Diversification Opportunities for Manager Directed and ProShares Russell

0.06

Correlation Coefficient

Manager Directed  ProShares Russell

Significant diversification

The 3 months correlation between Manager and ProShares is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Manager Directed Portfolios and ProShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Russell 2000 and Manager Directed 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 Manager Directed Portfolios are associated (or correlated) with ProShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Russell 2000 has no effect on the direction of Manager Directed i.e., Manager Directed and ProShares Russell go up and down completely randomly.

Pair Corralation between Manager Directed and ProShares Russell

Given the investment horizon of 90 days Manager Directed Portfolios is expected to generate 0.03 times more return on investment than ProShares Russell. However, Manager Directed Portfolios is 33.45 times less risky than ProShares Russell. It trades about 0.62 of its potential returns per unit of risk. ProShares Russell 2000 is currently generating about -0.04 per unit of risk. If you would invest  2,722  in Manager Directed Portfolios on December 30, 2024 and sell it today you would earn a total of  31.00  from holding Manager Directed Portfolios or generate 1.14% return on investment over 90 days.

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

Manager Directed Portfolios  vs.  ProShares Russell 2000

Manager Directed Por

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Manager Directed Portfolios are ranked lower than 48 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Manager Directed is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

ProShares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Russell 2000 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.

Pair Trading with Manager Directed and ProShares Russell

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

The idea behind Manager Directed Portfolios and ProShares Russell 2000 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.