Correlation Between ProShares and Absolute Core
Can any of the company-specific risk be diversified away by investing in both ProShares and Absolute Core 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 and Absolute Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP 500 and Absolute Core Strategy, you can compare the effects of market volatilities on ProShares and Absolute Core 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 with a short position of Absolute Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Absolute Core.
Diversification Opportunities for ProShares and Absolute Core
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Absolute is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Absolute Core Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Core Strategy and ProShares 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 SP 500 are associated (or correlated) with Absolute Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Core Strategy has no effect on the direction of ProShares i.e., ProShares and Absolute Core go up and down completely randomly.
Pair Corralation between ProShares and Absolute Core
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 1.41 times more return on investment than Absolute Core. However, ProShares is 1.41 times more volatile than Absolute Core Strategy. It trades about 0.25 of its potential returns per unit of risk. Absolute Core Strategy is currently generating about 0.12 per unit of risk. If you would invest 10,451 in ProShares SP 500 on August 30, 2024 and sell it today you would earn a total of 362.00 from holding ProShares SP 500 or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. Absolute Core Strategy
Performance |
| Timeline |
| ProShares SP 500 |
| Absolute Core Strategy |
ProShares and Absolute Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Absolute Core
The main advantage of trading using opposite ProShares and Absolute Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Absolute Core 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 Absolute Core will offset losses from the drop in Absolute Core's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| Absolute Core vs. iShares MSCI USA | Absolute Core vs. ABIVAX Socit Anonyme | Absolute Core vs. HUMANA INC | Absolute Core vs. SCOR PK |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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