Correlation Between Proshares Russell and Capital Group
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and Capital Group 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 Russell and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and Capital Group Core, you can compare the effects of market volatilities on Proshares Russell and Capital Group 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 Russell with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Capital Group.
Diversification Opportunities for Proshares Russell and Capital Group
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Proshares and Capital is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core and Proshares Russell 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 Russell 2000 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Core has no effect on the direction of Proshares Russell i.e., Proshares Russell and Capital Group go up and down completely randomly.
Pair Corralation between Proshares Russell and Capital Group
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 4.31 times more return on investment than Capital Group. However, Proshares Russell is 4.31 times more volatile than Capital Group Core. It trades about 0.08 of its potential returns per unit of risk. Capital Group Core is currently generating about -0.07 per unit of risk. If you would invest 4,116 in Proshares Russell 2000 on August 24, 2024 and sell it today you would earn a total of 81.00 from holding Proshares Russell 2000 or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Proshares Russell 2000 vs. Capital Group Core
Performance |
| Timeline |
| Proshares Russell 2000 |
| Capital Group Core |
Proshares Russell and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and Capital Group
The main advantage of trading using opposite Proshares Russell and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Proshares Russell vs. Global X SP | Proshares Russell vs. Global X Nasdaq | Proshares Russell vs. First Trust BuyWrite | Proshares Russell vs. Amplify CWP Enhanced |
| Capital Group vs. Capital Group Dividend | Capital Group vs. Capital Group Core | Capital Group vs. Capital Group Growth | Capital Group vs. Capital Group Global |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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