Correlation Between ProShares Merger and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ProShares Merger and Dow Jones 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 Merger and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Merger ETF and Dow Jones Industrial, you can compare the effects of market volatilities on ProShares Merger and Dow Jones 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 Merger with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Merger and Dow Jones.
Diversification Opportunities for ProShares Merger and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Merger ETF and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and ProShares 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 ProShares Merger ETF are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ProShares Merger i.e., ProShares Merger and Dow Jones go up and down completely randomly.
Pair Corralation between ProShares Merger and Dow Jones
Given the investment horizon of 90 days ProShares Merger is expected to generate 2.17 times less return on investment than Dow Jones. But when comparing it to its historical volatility, ProShares Merger ETF is 3.47 times less risky than Dow Jones. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,885,286 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 544,365 from holding Dow Jones Industrial or generate 14.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Merger ETF vs. Dow Jones Industrial
Performance |
| Timeline |
ProShares Merger and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ProShares Merger ETF
Pair trading matchups for ProShares Merger
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ProShares Merger and Dow Jones
The main advantage of trading using opposite ProShares Merger and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Merger position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| ProShares Merger vs. Albany International | ProShares Merger vs. Acadia Realty Trust | ProShares Merger vs. AptarGroup | ProShares Merger vs. Applied Industrial Technologies |
| Dow Jones vs. MI Homes | Dow Jones vs. Franklin Street Properties | Dow Jones vs. Summit Hotel Properties | Dow Jones vs. Portillos |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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