Correlation Between ProShares Trust and SPDR SP
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and SPDR SP Aerospace, you can compare the effects of market volatilities on ProShares Trust and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and SPDR SP.
Diversification Opportunities for ProShares Trust and SPDR SP
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and SPDR is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and SPDR SP Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Aerospace 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Aerospace has no effect on the direction of ProShares Trust i.e., ProShares Trust and SPDR SP go up and down completely randomly.
Pair Corralation between ProShares Trust and SPDR SP
Given the investment horizon of 90 days ProShares Trust is expected to under-perform the SPDR SP. In addition to that, ProShares Trust is 3.14 times more volatile than SPDR SP Aerospace. It trades about -0.11 of its total potential returns per unit of risk. SPDR SP Aerospace is currently generating about 0.1 per unit of volatility. If you would invest 10,825 in SPDR SP Aerospace on September 2, 2024 and sell it today you would earn a total of 6,827 from holding SPDR SP Aerospace or generate 63.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. SPDR SP Aerospace
Performance |
| Timeline |
| ProShares Trust |
| SPDR SP Aerospace |
ProShares Trust and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and SPDR SP
The main advantage of trading using opposite ProShares Trust and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Invesco Aerospace Defense | SPDR SP vs. iShares Aerospace Defense | SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Transportation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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