Correlation Between ProShares MSCI and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ProShares MSCI and Dow Jones 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 MSCI and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares MSCI Emerging and Dow Jones Industrial, you can compare the effects of market volatilities on ProShares MSCI and Dow Jones 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 MSCI with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares MSCI and Dow Jones.
Diversification Opportunities for ProShares MSCI and Dow Jones
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and Dow is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ProShares MSCI Emerging and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and ProShares MSCI 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 MSCI Emerging are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ProShares MSCI i.e., ProShares MSCI and Dow Jones go up and down completely randomly.
Pair Corralation between ProShares MSCI and Dow Jones
Given the investment horizon of 90 days ProShares MSCI Emerging is expected to under-perform the Dow Jones. In addition to that, ProShares MSCI is 1.09 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.03 per unit of volatility. If you would invest 4,501,404 in Dow Jones Industrial on November 4, 2024 and sell it today you would lose (46,938) from holding Dow Jones Industrial or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
ProShares MSCI Emerging vs. Dow Jones Industrial
Performance |
| Timeline |
ProShares MSCI and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ProShares MSCI Emerging
Pair trading matchups for ProShares MSCI
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ProShares MSCI and Dow Jones
The main advantage of trading using opposite ProShares MSCI and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares MSCI position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| ProShares MSCI vs. ProShares MSCI EAFE | ProShares MSCI vs. ProShares MSCI Europe | ProShares MSCI vs. ProShares Russell 2000 | ProShares MSCI vs. ProShares SP MidCap |
| Dow Jones vs. Rambler Metals and | Dow Jones vs. Nicola Mining | Dow Jones vs. Old Dominion Freight | Dow Jones vs. United Guardian |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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