Correlation Between ProShares and First Trust
Can any of the company-specific risk be diversified away by investing in both ProShares and First Trust 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 First Trust 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 First Trust Exchange Traded, you can compare the effects of market volatilities on ProShares and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and First Trust.
Diversification Opportunities for ProShares and First Trust
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and First is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of ProShares i.e., ProShares and First Trust go up and down completely randomly.
Pair Corralation between ProShares and First Trust
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 0.74 times more return on investment than First Trust. However, ProShares SP 500 is 1.35 times less risky than First Trust. It trades about 0.4 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.24 per unit of risk. If you would invest 10,345 in ProShares SP 500 on September 1, 2024 and sell it today you would earn a total of 502.00 from holding ProShares SP 500 or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ProShares SP 500 vs. First Trust Exchange Traded
Performance |
| Timeline |
| ProShares SP 500 |
| First Trust Exchange |
ProShares and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and First Trust
The main advantage of trading using opposite ProShares and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ProShares vs. iShares Core SP | ProShares vs. iShares Core MSCI | ProShares vs. iShares Broad USD | ProShares vs. iShares Core SP |
| First Trust vs. FT Vest Equity | First Trust vs. Northern Lights | First Trust vs. Dimensional International High | First Trust vs. Matthews China Discovery |
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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