Correlation Between AltShares Trust and ProShares Hedge
Can any of the company-specific risk be diversified away by investing in both AltShares Trust and ProShares Hedge 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 AltShares Trust and ProShares Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AltShares Trust and ProShares Hedge Replication, you can compare the effects of market volatilities on AltShares Trust and ProShares Hedge 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 AltShares Trust with a short position of ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of AltShares Trust and ProShares Hedge.
Diversification Opportunities for AltShares Trust and ProShares Hedge
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AltShares and ProShares is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AltShares Trust and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl and AltShares Trust 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 AltShares Trust are associated (or correlated) with ProShares Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of AltShares Trust i.e., AltShares Trust and ProShares Hedge go up and down completely randomly.
Pair Corralation between AltShares Trust and ProShares Hedge
Considering the 90-day investment horizon AltShares Trust is expected to under-perform the ProShares Hedge. But the etf apears to be less risky and, when comparing its historical volatility, AltShares Trust is 1.05 times less risky than ProShares Hedge. The etf trades about -0.02 of its potential returns per unit of risk. The ProShares Hedge Replication is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,999 in ProShares Hedge Replication on September 13, 2024 and sell it today you would earn a total of 44.00 from holding ProShares Hedge Replication or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
AltShares Trust vs. ProShares Hedge Replication
Performance |
| Timeline |
| AltShares Trust |
| ProShares Hedge Repl |
AltShares Trust and ProShares Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AltShares Trust and ProShares Hedge
The main advantage of trading using opposite AltShares Trust and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AltShares Trust position performs unexpectedly, ProShares Hedge 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 Hedge will offset losses from the drop in ProShares Hedge's long position.| AltShares Trust vs. Albany International | AltShares Trust vs. Acadia Realty Trust | AltShares Trust vs. AptarGroup | AltShares Trust vs. Applied Industrial Technologies |
| ProShares Hedge vs. ProShares Merger ETF | ProShares Hedge vs. IQ Hedge Multi Strategy | ProShares Hedge vs. ProShares Large Cap | ProShares Hedge vs. IQ Merger Arbitrage |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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