Correlation Between Dow Jones and ProShares Long
Can any of the company-specific risk be diversified away by investing in both Dow Jones and ProShares Long 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 Dow Jones and ProShares Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and ProShares Long OnlineShort, you can compare the effects of market volatilities on Dow Jones and ProShares Long 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 Dow Jones with a short position of ProShares Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ProShares Long.
Diversification Opportunities for Dow Jones and ProShares Long
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and ProShares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and ProShares Long OnlineShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Long Onlin and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with ProShares Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Long Onlin has no effect on the direction of Dow Jones i.e., Dow Jones and ProShares Long go up and down completely randomly.
Pair Corralation between Dow Jones and ProShares Long
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.57 times less return on investment than ProShares Long. But when comparing it to its historical volatility, Dow Jones Industrial is 1.53 times less risky than ProShares Long. It trades about 0.09 of its potential returns per unit of risk. ProShares Long OnlineShort is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,105 in ProShares Long OnlineShort on November 28, 2024 and sell it today you would earn a total of 851.00 from holding ProShares Long OnlineShort or generate 20.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.46% |
| Values | Daily Returns |
Dow Jones Industrial vs. ProShares Long OnlineShort
Performance |
| Timeline |
Dow Jones and ProShares Long Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ProShares Long OnlineShort
Pair trading matchups for ProShares Long
Pair Trading with Dow Jones and ProShares Long
The main advantage of trading using opposite Dow Jones and ProShares Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, ProShares Long 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 Long will offset losses from the drop in ProShares Long's long position.| Dow Jones vs. Gladstone Investment | Dow Jones vs. BW Offshore Limited | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. Aperture Health |
| ProShares Long vs. ProShares Online Retail | ProShares Long vs. Amplify Online Retail | ProShares Long vs. ProShares Decline of | ProShares Long vs. Global X E commerce |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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