Correlation Between ProShares and Freedom Day
Can any of the company-specific risk be diversified away by investing in both ProShares and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on ProShares and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Freedom Day.
Diversification Opportunities for ProShares and Freedom Day
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Freedom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of ProShares i.e., ProShares and Freedom Day go up and down completely randomly.
Pair Corralation between ProShares and Freedom Day
Given the investment horizon of 90 days ProShares is expected to generate 2.44 times less return on investment than Freedom Day. But when comparing it to its historical volatility, ProShares SP 500 is 1.29 times less risky than Freedom Day. It trades about 0.05 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,405 in Freedom Day Dividend on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Freedom Day Dividend or generate 3.23% 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. Freedom Day Dividend
Performance |
| Timeline |
| ProShares SP 500 |
| Freedom Day Dividend |
ProShares and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Freedom Day
The main advantage of trading using opposite ProShares and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |