Correlation Between ProShares Trust and Alerian Energy
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and Alerian Energy 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 Trust and Alerian Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and Alerian Energy Infrastructure, you can compare the effects of market volatilities on ProShares Trust and Alerian Energy 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 Trust with a short position of Alerian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and Alerian Energy.
Diversification Opportunities for ProShares Trust and Alerian Energy
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Alerian is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Alerian Energy Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alerian Energy Infra and ProShares 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 ProShares Trust are associated (or correlated) with Alerian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alerian Energy Infra has no effect on the direction of ProShares Trust i.e., ProShares Trust and Alerian Energy go up and down completely randomly.
Pair Corralation between ProShares Trust and Alerian Energy
Given the investment horizon of 90 days ProShares Trust is expected to generate 2.31 times more return on investment than Alerian Energy. However, ProShares Trust is 2.31 times more volatile than Alerian Energy Infrastructure. It trades about 0.19 of its potential returns per unit of risk. Alerian Energy Infrastructure is currently generating about -0.17 per unit of risk. If you would invest 2,296 in ProShares Trust on December 8, 2024 and sell it today you would earn a total of 244.00 from holding ProShares Trust or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. Alerian Energy Infrastructure
Performance |
| Timeline |
| ProShares Trust |
| Alerian Energy Infra |
ProShares Trust and Alerian Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and Alerian Energy
The main advantage of trading using opposite ProShares Trust and Alerian Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, Alerian Energy 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 Alerian Energy will offset losses from the drop in Alerian Energy's long position.| ProShares Trust vs. AXS TSLA Bear | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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