Correlation Between ProShares Equities and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both ProShares Equities and IShares MSCI 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 Equities and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Equities for and iShares MSCI USA, you can compare the effects of market volatilities on ProShares Equities and IShares MSCI 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 Equities with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Equities and IShares MSCI.
Diversification Opportunities for ProShares Equities and IShares MSCI
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and IShares is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Equities for and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and ProShares Equities 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 Equities for are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of ProShares Equities i.e., ProShares Equities and IShares MSCI go up and down completely randomly.
Pair Corralation between ProShares Equities and IShares MSCI
Given the investment horizon of 90 days ProShares Equities is expected to generate 2.02 times less return on investment than IShares MSCI. In addition to that, ProShares Equities is 1.31 times more volatile than iShares MSCI USA. It trades about 0.04 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.12 per unit of volatility. If you would invest 11,547 in iShares MSCI USA on November 28, 2024 and sell it today you would earn a total of 6,558 from holding iShares MSCI USA or generate 56.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
ProShares Equities for vs. iShares MSCI USA
Performance |
| Timeline |
| ProShares Equities for |
| iShares MSCI USA |
ProShares Equities and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Equities and IShares MSCI
The main advantage of trading using opposite ProShares Equities and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Equities position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| ProShares Equities vs. First Trust Developed | ProShares Equities vs. First Trust Indxx | ProShares Equities vs. Principal Quality ETF | ProShares Equities vs. VictoryShares Discovery Enhanced |
| IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. Invesco SP 500 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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