Correlation Between ProShares and IShares Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares and IShares 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 IShares 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 iShares Morningstar Value, you can compare the effects of market volatilities on ProShares and IShares 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 IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and IShares Morningstar.
Diversification Opportunities for ProShares and IShares Morningstar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and IShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and iShares Morningstar Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar Value 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar Value has no effect on the direction of ProShares i.e., ProShares and IShares Morningstar go up and down completely randomly.
Pair Corralation between ProShares and IShares Morningstar
Given the investment horizon of 90 days ProShares is expected to generate 1.28 times less return on investment than IShares Morningstar. But when comparing it to its historical volatility, ProShares SP 500 is 1.08 times less risky than IShares Morningstar. It trades about 0.17 of its potential returns per unit of risk. iShares Morningstar Value is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 8,230 in iShares Morningstar Value on August 29, 2024 and sell it today you would earn a total of 268.00 from holding iShares Morningstar Value or generate 3.26% 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. iShares Morningstar Value
Performance |
| Timeline |
| ProShares SP 500 |
| iShares Morningstar Value |
ProShares and IShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and IShares Morningstar
The main advantage of trading using opposite ProShares and IShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, IShares 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 IShares Morningstar will offset losses from the drop in IShares Morningstar's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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