Correlation Between ProShares Merger and WisdomTree Managed
Can any of the company-specific risk be diversified away by investing in both ProShares Merger and WisdomTree Managed 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 WisdomTree Managed 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 WisdomTree Managed Futures, you can compare the effects of market volatilities on ProShares Merger and WisdomTree Managed 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 WisdomTree Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Merger and WisdomTree Managed.
Diversification Opportunities for ProShares Merger and WisdomTree Managed
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and WisdomTree is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Merger ETF and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed 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 WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of ProShares Merger i.e., ProShares Merger and WisdomTree Managed go up and down completely randomly.
Pair Corralation between ProShares Merger and WisdomTree Managed
Given the investment horizon of 90 days ProShares Merger ETF is expected to generate 0.38 times more return on investment than WisdomTree Managed. However, ProShares Merger ETF is 2.63 times less risky than WisdomTree Managed. It trades about 0.12 of its potential returns per unit of risk. WisdomTree Managed Futures is currently generating about 0.03 per unit of risk. If you would invest 3,653 in ProShares Merger ETF on January 18, 2025 and sell it today you would earn a total of 496.00 from holding ProShares Merger ETF or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Merger ETF vs. WisdomTree Managed Futures
Performance |
| Timeline |
| ProShares Merger ETF |
| WisdomTree Managed |
ProShares Merger and WisdomTree Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Merger and WisdomTree Managed
The main advantage of trading using opposite ProShares Merger and WisdomTree Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Merger position performs unexpectedly, WisdomTree Managed 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 WisdomTree Managed will offset losses from the drop in WisdomTree Managed's long position.| ProShares Merger vs. ProShares Hedge Replication | ProShares Merger vs. IQ Merger Arbitrage | ProShares Merger vs. ProShares Global Listed | ProShares Merger vs. ProShares Investment GradeInterest |
| WisdomTree Managed vs. First Trust Managed | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. SPDR SSgA Multi Asset |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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