Correlation Between ProShares Trust and SPDR Series
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and SPDR Series 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 Series 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 Series Trust, you can compare the effects of market volatilities on ProShares Trust and SPDR Series 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 Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and SPDR Series.
Diversification Opportunities for ProShares Trust and SPDR Series
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and SPDR Series go up and down completely randomly.
Pair Corralation between ProShares Trust and SPDR Series
Assuming the 90 days trading horizon ProShares Trust is expected to generate 1.18 times more return on investment than SPDR Series. However, ProShares Trust is 1.18 times more volatile than SPDR Series Trust. It trades about 0.12 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.08 per unit of risk. If you would invest 105,649 in ProShares Trust on August 31, 2024 and sell it today you would earn a total of 112,551 from holding ProShares Trust or generate 106.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.93% |
| Values | Daily Returns |
ProShares Trust vs. SPDR Series Trust
Performance |
| Timeline |
| ProShares Trust |
| SPDR Series Trust |
ProShares Trust and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and SPDR Series
The main advantage of trading using opposite ProShares Trust and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, SPDR Series 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 Series will offset losses from the drop in SPDR Series' long position.| ProShares Trust vs. The Select Sector | ProShares Trust vs. Promotora y Operadora | ProShares Trust vs. iShares Global Timber | ProShares Trust vs. SPDR Series Trust |
| SPDR Series vs. Promotora y Operadora | SPDR Series vs. UnitedHealth Group Incorporated | SPDR Series vs. Qulitas Controladora SAB | SPDR Series vs. Hoteles City Express |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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