Correlation Between IQ Merger and ProShares Hedge
Can any of the company-specific risk be diversified away by investing in both IQ Merger and ProShares Hedge 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 IQ Merger and ProShares Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ Merger Arbitrage and ProShares Hedge Replication, you can compare the effects of market volatilities on IQ Merger and ProShares Hedge 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 IQ Merger with a short position of ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Merger and ProShares Hedge.
Diversification Opportunities for IQ Merger and ProShares Hedge
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MNA and ProShares is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding IQ Merger Arbitrage and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl and IQ Merger 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 IQ Merger Arbitrage are associated (or correlated) with ProShares Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of IQ Merger i.e., IQ Merger and ProShares Hedge go up and down completely randomly.
Pair Corralation between IQ Merger and ProShares Hedge
Considering the 90-day investment horizon IQ Merger is expected to generate 5.71 times less return on investment than ProShares Hedge. But when comparing it to its historical volatility, IQ Merger Arbitrage is 1.72 times less risky than ProShares Hedge. It trades about 0.03 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,996 in ProShares Hedge Replication on August 27, 2024 and sell it today you would earn a total of 35.00 from holding ProShares Hedge Replication or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ Merger Arbitrage vs. ProShares Hedge Replication
Performance |
| Timeline |
| IQ Merger Arbitrage |
| ProShares Hedge Repl |
IQ Merger and ProShares Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Merger and ProShares Hedge
The main advantage of trading using opposite IQ Merger and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Merger position performs unexpectedly, ProShares Hedge 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 Hedge will offset losses from the drop in ProShares Hedge's long position.| IQ Merger vs. IQ Hedge Multi Strategy | IQ Merger vs. ProShares Merger ETF | IQ Merger vs. AGFiQ Market Neutral |
| ProShares Hedge vs. IQ Merger Arbitrage | ProShares Hedge vs. First Trust LongShort | ProShares Hedge vs. Aquagold International | ProShares Hedge vs. Morningstar Unconstrained Allocation |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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