Correlation Between ProShares and IShares SP
Can any of the company-specific risk be diversified away by investing in both ProShares and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on ProShares and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and IShares SP.
Diversification Opportunities for ProShares and IShares SP
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of ProShares i.e., ProShares and IShares SP go up and down completely randomly.
Pair Corralation between ProShares and IShares SP
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 0.88 times more return on investment than IShares SP. However, ProShares SP 500 is 1.13 times less risky than IShares SP. It trades about -0.21 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.23 per unit of risk. If you would invest 10,553 in ProShares SP 500 on September 18, 2024 and sell it today you would lose (244.00) from holding ProShares SP 500 or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. iShares SP 500
Performance |
| Timeline |
| ProShares SP 500 |
| iShares SP 500 |
ProShares and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and IShares SP
The main advantage of trading using opposite ProShares and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| IShares SP vs. iShares SP 500 | IShares SP vs. iShares SP Mid Cap | IShares SP vs. iShares SP Small Cap | IShares SP vs. iShares SP Mid 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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