Correlation Between ProShares Investment and ProShares High
Can any of the company-specific risk be diversified away by investing in both ProShares Investment and ProShares High 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 Investment and ProShares High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Investment GradeInterest and ProShares High YieldInterest, you can compare the effects of market volatilities on ProShares Investment and ProShares High 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 Investment with a short position of ProShares High. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Investment and ProShares High.
Diversification Opportunities for ProShares Investment and ProShares High
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Investment GradeInte and ProShares High YieldInterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares High Yield and ProShares Investment 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 Investment GradeInterest are associated (or correlated) with ProShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares High Yield has no effect on the direction of ProShares Investment i.e., ProShares Investment and ProShares High go up and down completely randomly.
Pair Corralation between ProShares Investment and ProShares High
Given the investment horizon of 90 days ProShares Investment is expected to generate 1.71 times less return on investment than ProShares High. In addition to that, ProShares Investment is 1.7 times more volatile than ProShares High YieldInterest. It trades about 0.09 of its total potential returns per unit of risk. ProShares High YieldInterest is currently generating about 0.25 per unit of volatility. If you would invest 6,502 in ProShares High YieldInterest on August 28, 2024 and sell it today you would earn a total of 76.00 from holding ProShares High YieldInterest or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Investment GradeInte vs. ProShares High YieldInterest
Performance |
| Timeline |
| ProShares Investment |
| ProShares High Yield |
ProShares Investment and ProShares High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Investment and ProShares High
The main advantage of trading using opposite ProShares Investment and ProShares High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Investment position performs unexpectedly, ProShares High 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 High will offset losses from the drop in ProShares High's long position.The idea behind ProShares Investment GradeInterest and ProShares High YieldInterest pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ProShares High vs. ProShares Investment GradeInterest | ProShares High vs. iShares Interest Rate | ProShares High vs. WisdomTree Interest Rate | ProShares High vs. First Trust Tactical |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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