Correlation Between Proshares Russell and Wahed FTSE
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and Wahed FTSE 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 Wahed FTSE 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 Wahed FTSE USA, you can compare the effects of market volatilities on Proshares Russell and Wahed FTSE 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 Wahed FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Wahed FTSE.
Diversification Opportunities for Proshares Russell and Wahed FTSE
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Proshares and Wahed is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Wahed FTSE USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed FTSE USA 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 Wahed FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed FTSE USA has no effect on the direction of Proshares Russell i.e., Proshares Russell and Wahed FTSE go up and down completely randomly.
Pair Corralation between Proshares Russell and Wahed FTSE
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 13.99 times more return on investment than Wahed FTSE. However, Proshares Russell is 13.99 times more volatile than Wahed FTSE USA. It trades about 0.04 of its potential returns per unit of risk. Wahed FTSE USA is currently generating about 0.28 per unit of risk. If you would invest 4,343 in Proshares Russell 2000 on September 12, 2024 and sell it today you would lose (54.90) from holding Proshares Russell 2000 or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proshares Russell 2000 vs. Wahed FTSE USA
Performance |
| Timeline |
| Proshares Russell 2000 |
| Wahed FTSE USA |
Proshares Russell and Wahed FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and Wahed FTSE
The main advantage of trading using opposite Proshares Russell and Wahed FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, Wahed FTSE 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 Wahed FTSE will offset losses from the drop in Wahed FTSE's long position.| Proshares Russell vs. Freedom Day Dividend | Proshares Russell vs. Franklin Templeton ETF | Proshares Russell vs. iShares MSCI China | Proshares Russell vs. Tidal Trust II |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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