Correlation Between ProShares and VictoryShares
Can any of the company-specific risk be diversified away by investing in both ProShares and VictoryShares 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 VictoryShares 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 VictoryShares EQ Income, you can compare the effects of market volatilities on ProShares and VictoryShares 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 VictoryShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and VictoryShares.
Diversification Opportunities for ProShares and VictoryShares
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and VictoryShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and VictoryShares EQ Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares EQ Income 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 VictoryShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares EQ Income has no effect on the direction of ProShares i.e., ProShares and VictoryShares go up and down completely randomly.
Pair Corralation between ProShares and VictoryShares
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 1.12 times more return on investment than VictoryShares. However, ProShares is 1.12 times more volatile than VictoryShares EQ Income. It trades about 0.07 of its potential returns per unit of risk. VictoryShares EQ Income is currently generating about 0.05 per unit of risk. If you would invest 8,824 in ProShares SP 500 on September 1, 2024 and sell it today you would earn a total of 2,023 from holding ProShares SP 500 or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. VictoryShares EQ Income
Performance |
| Timeline |
| ProShares SP 500 |
| VictoryShares EQ Income |
ProShares and VictoryShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and VictoryShares
The main advantage of trading using opposite ProShares and VictoryShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, VictoryShares 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 VictoryShares will offset losses from the drop in VictoryShares' long position.| ProShares vs. iShares Core SP | ProShares vs. iShares Core MSCI | ProShares vs. iShares Broad USD | ProShares vs. iShares Core SP |
| VictoryShares vs. VictoryShares 500 Enhanced | VictoryShares vs. VictoryShares 500 Volatility | VictoryShares vs. VictoryShares Discovery Enhanced | VictoryShares vs. VictoryShares Small Cap |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |