Correlation Between ProShares and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both ProShares and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on ProShares and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and SPDR Portfolio.
Diversification Opportunities for ProShares and SPDR Portfolio
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and SPDR is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of ProShares i.e., ProShares and SPDR Portfolio go up and down completely randomly.
Pair Corralation between ProShares and SPDR Portfolio
Given the investment horizon of 90 days ProShares is expected to generate 1.44 times less return on investment than SPDR Portfolio. But when comparing it to its historical volatility, ProShares SP 500 is 1.04 times less risky than SPDR Portfolio. It trades about 0.17 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 4,555 in SPDR Portfolio SP on August 29, 2024 and sell it today you would earn a total of 161.00 from holding SPDR Portfolio SP or generate 3.53% 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. SPDR Portfolio SP
Performance |
| Timeline |
| ProShares SP 500 |
| SPDR Portfolio SP |
ProShares and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and SPDR Portfolio
The main advantage of trading using opposite ProShares and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio's long position.| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
| SPDR Portfolio vs. Invesco SP 500 | SPDR Portfolio vs. iShares Core High | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. Schwab Dividend Equity |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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