Correlation Between ProShares Trust and American Century
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and American Century Mid, you can compare the effects of market volatilities on ProShares Trust and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and American Century.
Diversification Opportunities for ProShares Trust and American Century
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and American is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and American Century Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Mid 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Mid has no effect on the direction of ProShares Trust i.e., ProShares Trust and American Century go up and down completely randomly.
Pair Corralation between ProShares Trust and American Century
Given the investment horizon of 90 days ProShares Trust is expected to under-perform the American Century. In addition to that, ProShares Trust is 3.51 times more volatile than American Century Mid. It trades about -0.47 of its total potential returns per unit of risk. American Century Mid is currently generating about 0.2 per unit of volatility. If you would invest 6,097 in American Century Mid on August 26, 2024 and sell it today you would earn a total of 292.00 from holding American Century Mid or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. American Century Mid
Performance |
| Timeline |
| ProShares Trust |
| American Century Mid |
ProShares Trust and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and American Century
The main advantage of trading using opposite ProShares Trust and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| ProShares Trust vs. AXS TSLA Bear | ProShares Trust vs. Tuttle Capital Short | ProShares Trust vs. ProShares Bitcoin Strategy | ProShares Trust vs. ProShares UltraShort Bloomberg |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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