Correlation Between IShares Technology and ProShares
Can any of the company-specific risk be diversified away by investing in both IShares Technology 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 Technology and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Technology ETF and ProShares SP Technology, you can compare the effects of market volatilities on IShares Technology 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 Technology with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and ProShares.
Diversification Opportunities for IShares Technology and ProShares
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology and IShares Technology 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 Technology ETF 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 Technology has no effect on the direction of IShares Technology i.e., IShares Technology and ProShares go up and down completely randomly.
Pair Corralation between IShares Technology and ProShares
Considering the 90-day investment horizon iShares Technology ETF is expected to generate 1.26 times more return on investment than ProShares. However, IShares Technology is 1.26 times more volatile than ProShares SP Technology. It trades about 0.13 of its potential returns per unit of risk. ProShares SP Technology is currently generating about 0.07 per unit of risk. If you would invest 7,371 in iShares Technology ETF on August 26, 2024 and sell it today you would earn a total of 8,534 from holding iShares Technology ETF or generate 115.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Technology ETF vs. ProShares SP Technology
Performance |
| Timeline |
| iShares Technology ETF |
| ProShares SP Technology |
IShares Technology and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Technology and ProShares
The main advantage of trading using opposite IShares Technology and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology 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 Technology vs. Invesco DWA Utilities | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. Invesco Dynamic Large | IShares Technology vs. HUMANA INC |
| ProShares vs. Invesco DWA Utilities | ProShares vs. Invesco Dynamic Large | ProShares vs. Invesco Dynamic Large | ProShares vs. HUMANA INC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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