Correlation Between ProShares and FlexShares Quality
Can any of the company-specific risk be diversified away by investing in both ProShares and FlexShares Quality 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 FlexShares Quality 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 FlexShares Quality Dividend, you can compare the effects of market volatilities on ProShares and FlexShares Quality 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 FlexShares Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and FlexShares Quality.
Diversification Opportunities for ProShares and FlexShares Quality
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and FlexShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and FlexShares Quality Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Quality 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 FlexShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Quality has no effect on the direction of ProShares i.e., ProShares and FlexShares Quality go up and down completely randomly.
Pair Corralation between ProShares and FlexShares Quality
Given the investment horizon of 90 days ProShares is expected to generate 1.56 times less return on investment than FlexShares Quality. But when comparing it to its historical volatility, ProShares SP 500 is 1.09 times less risky than FlexShares Quality. It trades about 0.08 of its potential returns per unit of risk. FlexShares Quality Dividend is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,621 in FlexShares Quality Dividend on August 28, 2024 and sell it today you would earn a total of 1,701 from holding FlexShares Quality Dividend or generate 30.26% 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. FlexShares Quality Dividend
Performance |
| Timeline |
| ProShares SP 500 |
| FlexShares Quality |
ProShares and FlexShares Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and FlexShares Quality
The main advantage of trading using opposite ProShares and FlexShares Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, FlexShares Quality 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 FlexShares Quality will offset losses from the drop in FlexShares Quality's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| FlexShares Quality vs. BlackRock ETF Trust | FlexShares Quality vs. Rbb Fund | FlexShares Quality vs. Virtus ETF Trust | FlexShares Quality vs. Amplify CWP Enhanced |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |