Correlation Between Proshares Russell and FlexShares Disciplined
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and FlexShares Disciplined 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 FlexShares Disciplined 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 FlexShares Disciplined Duration, you can compare the effects of market volatilities on Proshares Russell and FlexShares Disciplined 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 FlexShares Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and FlexShares Disciplined.
Diversification Opportunities for Proshares Russell and FlexShares Disciplined
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Proshares and FlexShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and FlexShares Disciplined Duratio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Disciplined 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 FlexShares Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Disciplined has no effect on the direction of Proshares Russell i.e., Proshares Russell and FlexShares Disciplined go up and down completely randomly.
Pair Corralation between Proshares Russell and FlexShares Disciplined
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 3.49 times more return on investment than FlexShares Disciplined. However, Proshares Russell is 3.49 times more volatile than FlexShares Disciplined Duration. It trades about 0.22 of its potential returns per unit of risk. FlexShares Disciplined Duration is currently generating about 0.08 per unit of risk. If you would invest 4,159 in Proshares Russell 2000 on August 30, 2024 and sell it today you would earn a total of 253.00 from holding Proshares Russell 2000 or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proshares Russell 2000 vs. FlexShares Disciplined Duratio
Performance |
| Timeline |
| Proshares Russell 2000 |
| FlexShares Disciplined |
Proshares Russell and FlexShares Disciplined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and FlexShares Disciplined
The main advantage of trading using opposite Proshares Russell and FlexShares Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, FlexShares Disciplined 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 FlexShares Disciplined will offset losses from the drop in FlexShares Disciplined'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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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