Correlation Between ProShares Hedge and ProShares Inflation
Can any of the company-specific risk be diversified away by investing in both ProShares Hedge and ProShares Inflation 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 Hedge and ProShares Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Hedge Replication and ProShares Inflation Expectations, you can compare the effects of market volatilities on ProShares Hedge and ProShares Inflation 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 Hedge with a short position of ProShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Hedge and ProShares Inflation.
Diversification Opportunities for ProShares Hedge and ProShares Inflation
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Hedge Replication and ProShares Inflation Expectatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Inflation and ProShares Hedge 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 Hedge Replication are associated (or correlated) with ProShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Inflation has no effect on the direction of ProShares Hedge i.e., ProShares Hedge and ProShares Inflation go up and down completely randomly.
Pair Corralation between ProShares Hedge and ProShares Inflation
Considering the 90-day investment horizon ProShares Hedge Replication is expected to generate 0.71 times more return on investment than ProShares Inflation. However, ProShares Hedge Replication is 1.42 times less risky than ProShares Inflation. It trades about 0.08 of its potential returns per unit of risk. ProShares Inflation Expectations is currently generating about 0.04 per unit of risk. If you would invest 4,852 in ProShares Hedge Replication on August 24, 2024 and sell it today you would earn a total of 174.03 from holding ProShares Hedge Replication or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Hedge Replication vs. ProShares Inflation Expectatio
Performance |
| Timeline |
| ProShares Hedge Repl |
| ProShares Inflation |
ProShares Hedge and ProShares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Hedge and ProShares Inflation
The main advantage of trading using opposite ProShares Hedge and ProShares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Hedge position performs unexpectedly, ProShares Inflation 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 Inflation will offset losses from the drop in ProShares Inflation's long position.| ProShares Hedge vs. IQ Merger Arbitrage | ProShares Hedge vs. First Trust LongShort | ProShares Hedge vs. Aquagold International | ProShares Hedge vs. Morningstar Unconstrained Allocation |
| ProShares Inflation vs. SPDR SSgA Multi Asset | ProShares Inflation vs. ProShares Hedge Replication | ProShares Inflation vs. ProShares Short 7 10 | ProShares Inflation vs. ProShares Merger ETF |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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