Correlation Between NYSE Composite and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ProShares Trust 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 NYSE Composite and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and ProShares Trust, you can compare the effects of market volatilities on NYSE Composite and ProShares Trust 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 NYSE Composite with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ProShares Trust.
Diversification Opportunities for NYSE Composite and ProShares Trust
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and ProShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and NYSE Composite 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 NYSE Composite are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and ProShares Trust go up and down completely randomly.
Pair Corralation between NYSE Composite and ProShares Trust
Assuming the 90 days trading horizon NYSE Composite is expected to generate 3.59 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, NYSE Composite is 5.5 times less risky than ProShares Trust. It trades about 0.14 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,346 in ProShares Trust on August 26, 2024 and sell it today you would earn a total of 4,032 from holding ProShares Trust or generate 92.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. ProShares Trust
Performance |
| Timeline |
NYSE Composite and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ProShares Trust
Pair trading matchups for ProShares Trust
Pair Trading with NYSE Composite and ProShares Trust
The main advantage of trading using opposite NYSE Composite and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| ProShares Trust vs. Grayscale Bitcoin Trust | ProShares Trust vs. Siren Nasdaq NexGen | ProShares Trust vs. Grayscale Bitcoin Mini | ProShares Trust vs. First Trust SkyBridge |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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