Correlation Between ProShares and Columbia Research
Can any of the company-specific risk be diversified away by investing in both ProShares and Columbia Research 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 Columbia Research 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 Columbia Research Enhanced, you can compare the effects of market volatilities on ProShares and Columbia Research 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 Columbia Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Columbia Research.
Diversification Opportunities for ProShares and Columbia Research
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Columbia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Columbia Research Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Research 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 Columbia Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Research has no effect on the direction of ProShares i.e., ProShares and Columbia Research go up and down completely randomly.
Pair Corralation between ProShares and Columbia Research
Given the investment horizon of 90 days ProShares is expected to generate 4.88 times less return on investment than Columbia Research. But when comparing it to its historical volatility, ProShares SP 500 is 1.15 times less risky than Columbia Research. It trades about 0.05 of its potential returns per unit of risk. Columbia Research Enhanced is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,538 in Columbia Research Enhanced on August 29, 2024 and sell it today you would earn a total of 158.00 from holding Columbia Research Enhanced or generate 6.23% 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. Columbia Research Enhanced
Performance |
| Timeline |
| ProShares SP 500 |
| Columbia Research |
ProShares and Columbia Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Columbia Research
The main advantage of trading using opposite ProShares and Columbia Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Columbia Research 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 Columbia Research will offset losses from the drop in Columbia Research's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| Columbia Research vs. QRAFT AI Enhanced Large | Columbia Research vs. Vesper Large Cap | Columbia Research vs. Columbia ETF Trust |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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