Correlation Between ProShares and ProShares Russell
Can any of the company-specific risk be diversified away by investing in both ProShares and ProShares Russell 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 ProShares Russell 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 ProShares Russell 2000, you can compare the effects of market volatilities on ProShares and ProShares Russell 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 ProShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and ProShares Russell.
Diversification Opportunities for ProShares and ProShares Russell
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and ProShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and ProShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Russell 2000 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 ProShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Russell 2000 has no effect on the direction of ProShares i.e., ProShares and ProShares Russell go up and down completely randomly.
Pair Corralation between ProShares and ProShares Russell
Given the investment horizon of 90 days ProShares is expected to generate 14.22 times less return on investment than ProShares Russell. But when comparing it to its historical volatility, ProShares SP 500 is 2.76 times less risky than ProShares Russell. It trades about 0.04 of its potential returns per unit of risk. ProShares Russell 2000 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,861 in ProShares Russell 2000 on August 24, 2024 and sell it today you would earn a total of 509.00 from holding ProShares Russell 2000 or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. ProShares Russell 2000
Performance |
| Timeline |
| ProShares SP 500 |
| ProShares Russell 2000 |
ProShares and ProShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and ProShares Russell
The main advantage of trading using opposite ProShares and ProShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, ProShares Russell 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 ProShares Russell will offset losses from the drop in ProShares Russell's long position.| ProShares vs. Vanguard Russell 1000 | ProShares vs. Vanguard Russell 2000 | ProShares vs. Vanguard Russell 3000 | ProShares vs. Vanguard Russell 2000 |
| ProShares Russell vs. Dimensional ETF Trust | ProShares Russell vs. Vanguard Small Cap Index | ProShares Russell vs. First Trust Multi Manager | ProShares Russell vs. Vanguard SP Small Cap |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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