Correlation Between FT Cboe and ProShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both FT Cboe and ProShares Nasdaq 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 FT Cboe and ProShares Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and ProShares Nasdaq 100 High, you can compare the effects of market volatilities on FT Cboe and ProShares Nasdaq 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 FT Cboe with a short position of ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and ProShares Nasdaq.
Diversification Opportunities for FT Cboe and ProShares Nasdaq
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KNG and ProShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and ProShares Nasdaq 100 High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nasdaq 100 and FT Cboe 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 FT Cboe Vest are associated (or correlated) with ProShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nasdaq 100 has no effect on the direction of FT Cboe i.e., FT Cboe and ProShares Nasdaq go up and down completely randomly.
Pair Corralation between FT Cboe and ProShares Nasdaq
Considering the 90-day investment horizon FT Cboe is expected to generate 1.19 times less return on investment than ProShares Nasdaq. But when comparing it to its historical volatility, FT Cboe Vest is 2.1 times less risky than ProShares Nasdaq. It trades about 0.14 of its potential returns per unit of risk. ProShares Nasdaq 100 High is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,883 in ProShares Nasdaq 100 High on September 1, 2024 and sell it today you would earn a total of 440.00 from holding ProShares Nasdaq 100 High or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
FT Cboe Vest vs. ProShares Nasdaq 100 High
Performance |
| Timeline |
| FT Cboe Vest |
| ProShares Nasdaq 100 |
FT Cboe and ProShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Cboe and ProShares Nasdaq
The main advantage of trading using opposite FT Cboe and ProShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, ProShares Nasdaq 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 Nasdaq will offset losses from the drop in ProShares Nasdaq's long position.| FT Cboe vs. Global X SP | FT Cboe vs. Global X Nasdaq | FT Cboe vs. First Trust BuyWrite | FT Cboe vs. Amplify CWP Enhanced |
| ProShares Nasdaq vs. Global X SP | ProShares Nasdaq vs. Amplify CWP Enhanced | ProShares Nasdaq vs. JPMorgan Equity Premium |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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