Correlation Between ProShares Big and ProShares Smart
Can any of the company-specific risk be diversified away by investing in both ProShares Big and ProShares Smart 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 Big and ProShares Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Big Data and ProShares Smart Materials, you can compare the effects of market volatilities on ProShares Big and ProShares Smart 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 Big with a short position of ProShares Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Big and ProShares Smart.
Diversification Opportunities for ProShares Big and ProShares Smart
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and ProShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Big Data and ProShares Smart Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Smart Materials and ProShares Big 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 Big Data are associated (or correlated) with ProShares Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Smart Materials has no effect on the direction of ProShares Big i.e., ProShares Big and ProShares Smart go up and down completely randomly.
Pair Corralation between ProShares Big and ProShares Smart
Considering the 90-day investment horizon ProShares Big Data is expected to generate 1.88 times more return on investment than ProShares Smart. However, ProShares Big is 1.88 times more volatile than ProShares Smart Materials. It trades about 0.49 of its potential returns per unit of risk. ProShares Smart Materials is currently generating about -0.22 per unit of risk. If you would invest 3,834 in ProShares Big Data on August 30, 2024 and sell it today you would earn a total of 737.00 from holding ProShares Big Data or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
ProShares Big Data vs. ProShares Smart Materials
Performance |
| Timeline |
| ProShares Big Data |
| ProShares Smart Materials |
ProShares Big and ProShares Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Big and ProShares Smart
The main advantage of trading using opposite ProShares Big and ProShares Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Big position performs unexpectedly, ProShares Smart 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 Smart will offset losses from the drop in ProShares Smart's long position.| ProShares Big vs. ProShares SP Kensho | ProShares Big vs. ProShares SP Kensho | ProShares Big vs. ProShares Smart Materials | ProShares Big vs. ProShares On Demand ETF |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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