Correlation Between ProShares Large and IQ Merger
Can any of the company-specific risk be diversified away by investing in both ProShares Large and IQ Merger 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 Large and IQ Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Large Cap and IQ Merger Arbitrage, you can compare the effects of market volatilities on ProShares Large and IQ Merger 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 Large with a short position of IQ Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Large and IQ Merger.
Diversification Opportunities for ProShares Large and IQ Merger
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ProShares and MNA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Large Cap and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage and ProShares Large 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 Large Cap are associated (or correlated) with IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of ProShares Large i.e., ProShares Large and IQ Merger go up and down completely randomly.
Pair Corralation between ProShares Large and IQ Merger
Considering the 90-day investment horizon ProShares Large Cap is expected to generate 2.87 times more return on investment than IQ Merger. However, ProShares Large is 2.87 times more volatile than IQ Merger Arbitrage. It trades about 0.1 of its potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.03 per unit of risk. If you would invest 4,647 in ProShares Large Cap on September 3, 2024 and sell it today you would earn a total of 2,205 from holding ProShares Large Cap or generate 47.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Large Cap vs. IQ Merger Arbitrage
Performance |
| Timeline |
| ProShares Large Cap |
| IQ Merger Arbitrage |
ProShares Large and IQ Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Large and IQ Merger
The main advantage of trading using opposite ProShares Large and IQ Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Large position performs unexpectedly, IQ Merger 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 IQ Merger will offset losses from the drop in IQ Merger's long position.| ProShares Large vs. ProShares Hedge Replication | ProShares Large vs. ProShares Ultra MSCI | ProShares Large vs. ProShares Ultra Consumer | ProShares Large vs. ProShares Ultra Consumer |
| IQ Merger vs. IQ Hedge Multi Strategy | IQ Merger vs. ProShares Merger ETF | IQ Merger vs. AGFiQ Market Neutral |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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