Correlation Between ProShares and IShares Core
Can any of the company-specific risk be diversified away by investing in both ProShares and IShares 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 IShares 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 iShares Core SP, you can compare the effects of market volatilities on ProShares and IShares 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and IShares Core.
Diversification Opportunities for ProShares and IShares Core
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of ProShares i.e., ProShares and IShares Core go up and down completely randomly.
Pair Corralation between ProShares and IShares Core
Given the investment horizon of 90 days ProShares is expected to generate 1.92 times less return on investment than IShares Core. But when comparing it to its historical volatility, ProShares SP 500 is 1.19 times less risky than IShares Core. It trades about 0.15 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,508 in iShares Core SP on August 26, 2024 and sell it today you would earn a total of 389.00 from holding iShares Core SP or generate 4.09% 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. iShares Core SP
Performance |
| Timeline |
| ProShares SP 500 |
| iShares Core SP |
ProShares and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and IShares Core
The main advantage of trading using opposite ProShares and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, IShares 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 IShares Core will offset losses from the drop in IShares Core's long position.| ProShares vs. BlackRock ETF Trust | ProShares vs. Rbb Fund | ProShares vs. Virtus ETF Trust | ProShares vs. Amplify CWP Enhanced |
| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Broad USD | IShares Core 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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