Correlation Between ProShares Metaverse and ProShares Supply

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

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

Diversification Opportunities for ProShares Metaverse and ProShares Supply

0.69

Correlation Coefficient

ProShares Metaverse  ProShares Supply

Poor diversification

The 3 months correlation between ProShares and ProShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Metaverse ETF 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 ProShares Metaverse 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 Metaverse ETF 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 ProShares Metaverse i.e., ProShares Metaverse and ProShares Supply go up and down completely randomly.

Pair Corralation between ProShares Metaverse and ProShares Supply

Given the investment horizon of 90 days ProShares Metaverse ETF is expected to under-perform the ProShares Supply. In addition to that, ProShares Metaverse is 2.47 times more volatile than ProShares Supply Chain. It trades about -0.02 of its total potential returns per unit of risk. ProShares Supply Chain is currently generating about -0.02 per unit of volatility. If you would invest  3,755  in ProShares Supply Chain on December 28, 2024 and sell it today you would lose (48.00) from holding ProShares Supply Chain or give up 1.28% of portfolio value over 90 days.

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

ProShares Metaverse ETF  vs.  ProShares Supply Chain

ProShares Metaverse ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Metaverse ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ProShares Metaverse is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private 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 quite persistent basic indicators, ProShares Supply is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ProShares Metaverse and ProShares Supply

The main advantage of trading using opposite ProShares Metaverse and ProShares Supply positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Metaverse 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 ProShares Metaverse ETF 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.