Correlation Between IShares Edge and ProShares
Can any of the company-specific risk be diversified away by investing in both IShares Edge and ProShares 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 IShares Edge and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Edge Investment and ProShares SP 500, you can compare the effects of market volatilities on IShares Edge and ProShares 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 IShares Edge with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Edge and ProShares.
Diversification Opportunities for IShares Edge and ProShares
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and ProShares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Edge Investment and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and IShares Edge 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 iShares Edge Investment are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of IShares Edge i.e., IShares Edge and ProShares go up and down completely randomly.
Pair Corralation between IShares Edge and ProShares
Given the investment horizon of 90 days iShares Edge Investment is expected to under-perform the ProShares. But the etf apears to be less risky and, when comparing its historical volatility, iShares Edge Investment is 2.15 times less risky than ProShares. The etf trades about -0.04 of its potential returns per unit of risk. The ProShares SP 500 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,925 in ProShares SP 500 on September 12, 2024 and sell it today you would earn a total of 680.23 from holding ProShares SP 500 or generate 11.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Edge Investment vs. ProShares SP 500
Performance |
| Timeline |
| iShares Edge Investment |
| ProShares SP 500 |
IShares Edge and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Edge and ProShares
The main advantage of trading using opposite IShares Edge and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Edge position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| IShares Edge vs. iShares Edge High | IShares Edge vs. iShares ESG USD | IShares Edge vs. iShares ESG 1 5 | IShares Edge vs. iShares Interest Rate |
| ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares Ultra High |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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