Correlation Between ProShares and Schwab Dividend
Can any of the company-specific risk be diversified away by investing in both ProShares and Schwab 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 Schwab 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 Schwab Dividend Equity, you can compare the effects of market volatilities on ProShares and Schwab 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 Schwab Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Schwab Dividend.
Diversification Opportunities for ProShares and Schwab Dividend
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Schwab is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Schwab Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Dividend Equity 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 Schwab Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Dividend Equity has no effect on the direction of ProShares i.e., ProShares and Schwab Dividend go up and down completely randomly.
Pair Corralation between ProShares and Schwab Dividend
Given the investment horizon of 90 days ProShares SP 500 is expected to under-perform the Schwab Dividend. In addition to that, ProShares is 1.01 times more volatile than Schwab Dividend Equity. It trades about -0.1 of its total potential returns per unit of risk. Schwab Dividend Equity is currently generating about -0.05 per unit of volatility. If you would invest 2,845 in Schwab Dividend Equity on November 27, 2024 and sell it today you would lose (19.00) from holding Schwab Dividend Equity or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. Schwab Dividend Equity
Performance |
| Timeline |
| ProShares SP 500 |
| Schwab Dividend Equity |
ProShares and Schwab Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Schwab Dividend
The main advantage of trading using opposite ProShares and Schwab Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Schwab 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 Schwab Dividend will offset losses from the drop in Schwab Dividend's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| Schwab Dividend vs. Vanguard High Dividend | Schwab Dividend vs. JPMorgan Equity Premium | Schwab Dividend vs. Vanguard Dividend Appreciation | Schwab Dividend vs. iShares Core Dividend |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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