Correlation Between ProShares and Invesco Dividend
Can any of the company-specific risk be diversified away by investing in both ProShares and Invesco Dividend 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 Invesco Dividend 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 Invesco Dividend Achievers, you can compare the effects of market volatilities on ProShares and Invesco Dividend 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 Invesco Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Invesco Dividend.
Diversification Opportunities for ProShares and Invesco Dividend
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Invesco Dividend Achievers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Dividend Ach 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 Invesco Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Dividend Ach has no effect on the direction of ProShares i.e., ProShares and Invesco Dividend go up and down completely randomly.
Pair Corralation between ProShares and Invesco Dividend
Given the investment horizon of 90 days ProShares is expected to generate 2.65 times less return on investment than Invesco Dividend. But when comparing it to its historical volatility, ProShares SP 500 is 1.1 times less risky than Invesco Dividend. It trades about 0.04 of its potential returns per unit of risk. Invesco Dividend Achievers is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,666 in Invesco Dividend Achievers on August 24, 2024 and sell it today you would earn a total of 63.00 from holding Invesco Dividend Achievers or generate 1.35% 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. Invesco Dividend Achievers
Performance |
| Timeline |
| ProShares SP 500 |
| Invesco Dividend Ach |
ProShares and Invesco Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Invesco Dividend
The main advantage of trading using opposite ProShares and Invesco Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Invesco Dividend 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 Invesco Dividend will offset losses from the drop in Invesco Dividend's long position.| ProShares vs. Vanguard Russell 1000 | ProShares vs. Vanguard Russell 2000 | ProShares vs. Vanguard Russell 3000 | ProShares vs. Vanguard Russell 2000 |
| Invesco Dividend vs. Vanguard Russell 1000 | Invesco Dividend vs. Vanguard Russell 2000 | Invesco Dividend vs. Vanguard Russell 3000 | Invesco Dividend vs. Vanguard Russell 2000 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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