Correlation Between SPDR SP and ProShares
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP MIDCAP and ProShares SP MidCap, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ProShares.
Diversification Opportunities for SPDR SP and ProShares
Almost no diversification
The 3 months correlation between SPDR and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap and SPDR SP 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 SPDR SP MIDCAP 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 MidCap has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares go up and down completely randomly.
Pair Corralation between SPDR SP and ProShares
Considering the 90-day investment horizon SPDR SP MIDCAP is expected to generate 1.11 times more return on investment than ProShares. However, SPDR SP is 1.11 times more volatile than ProShares SP MidCap. It trades about 0.07 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.05 per unit of risk. If you would invest 44,181 in SPDR SP MIDCAP on August 27, 2024 and sell it today you would earn a total of 16,890 from holding SPDR SP MIDCAP or generate 38.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP MIDCAP vs. ProShares SP MidCap
Performance |
| Timeline |
| SPDR SP MIDCAP |
| ProShares SP MidCap |
SPDR SP and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ProShares
The main advantage of trading using opposite SPDR SP and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. iShares Core SP | SPDR SP vs. iShares Russell 2000 | SPDR SP vs. iShares MSCI EAFE | SPDR SP vs. iShares Russell 2000 |
| ProShares vs. Vanguard Mid Cap Index | ProShares vs. iShares Core SP | ProShares vs. SPDR SP MIDCAP | ProShares vs. First Trust Dorsey |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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