Correlation Between Microsoft and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Microsoft and ProShares Trust 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 Microsoft and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and ProShares Trust, you can compare the effects of market volatilities on Microsoft and ProShares Trust 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 Microsoft with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and ProShares Trust.
Diversification Opportunities for Microsoft and ProShares Trust
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and ProShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Microsoft 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 Microsoft are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Microsoft i.e., Microsoft and ProShares Trust go up and down completely randomly.
Pair Corralation between Microsoft and ProShares Trust
Given the investment horizon of 90 days Microsoft is expected to generate 7.69 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Microsoft is 2.89 times less risky than ProShares Trust. It trades about 0.04 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,225 in ProShares Trust on August 26, 2024 and sell it today you would earn a total of 5,016 from holding ProShares Trust or generate 118.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. ProShares Trust
Performance |
| Timeline |
| Microsoft |
| ProShares Trust |
Microsoft and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and ProShares Trust
The main advantage of trading using opposite Microsoft and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| ProShares Trust vs. Grayscale Bitcoin Trust | ProShares Trust vs. Siren Nasdaq NexGen | ProShares Trust vs. Grayscale Bitcoin Mini | ProShares Trust vs. First Trust SkyBridge |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |