Correlation Between ProShares and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares and VanEck Morningstar 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 VanEck Morningstar 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 VanEck Morningstar Durable, you can compare the effects of market volatilities on ProShares and VanEck Morningstar 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 VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and VanEck Morningstar.
Diversification Opportunities for ProShares and VanEck Morningstar
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and VanEck is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and VanEck Morningstar Durable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar has no effect on the direction of ProShares i.e., ProShares and VanEck Morningstar go up and down completely randomly.
Pair Corralation between ProShares and VanEck Morningstar
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 1.1 times more return on investment than VanEck Morningstar. However, ProShares is 1.1 times more volatile than VanEck Morningstar Durable. It trades about 0.15 of its potential returns per unit of risk. VanEck Morningstar Durable is currently generating about 0.16 per unit of risk. If you would invest 9,659 in ProShares SP 500 on September 1, 2024 and sell it today you would earn a total of 1,188 from holding ProShares SP 500 or generate 12.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
ProShares SP 500 vs. VanEck Morningstar Durable
Performance |
| Timeline |
| ProShares SP 500 |
| VanEck Morningstar |
ProShares and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and VanEck Morningstar
The main advantage of trading using opposite ProShares and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, VanEck Morningstar 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 VanEck Morningstar will offset losses from the drop in VanEck Morningstar's long position.| ProShares vs. iShares Core SP | ProShares vs. iShares Core MSCI | ProShares vs. iShares Broad USD | ProShares vs. iShares Core SP |
| VanEck Morningstar vs. iShares Core SP | VanEck Morningstar vs. iShares Core MSCI | VanEck Morningstar vs. iShares Broad USD | VanEck Morningstar vs. iShares Core SP |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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