Correlation Between NYSE Composite and ProShares
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and ProShares 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 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 DJ Brookfield, you can compare the effects of market volatilities on NYSE Composite and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and ProShares.
Diversification Opportunities for NYSE Composite and ProShares
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and ProShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and ProShares DJ Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares DJ Brookfield 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares DJ Brookfield has no effect on the direction of NYSE Composite i.e., NYSE Composite and ProShares go up and down completely randomly.
Pair Corralation between NYSE Composite and ProShares
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.93 times more return on investment than ProShares. However, NYSE Composite is 1.07 times less risky than ProShares. It trades about 0.08 of its potential returns per unit of risk. ProShares DJ Brookfield is currently generating about 0.06 per unit of risk. If you would invest 1,546,867 in NYSE Composite on September 2, 2024 and sell it today you would earn a total of 480,337 from holding NYSE Composite or generate 31.05% 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 DJ Brookfield
Performance |
| Timeline |
NYSE Composite and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
ProShares DJ Brookfield
Pair trading matchups for ProShares
Pair Trading with NYSE Composite and ProShares
The main advantage of trading using opposite NYSE Composite and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| NYSE Composite vs. Simon Property Group | NYSE Composite vs. Merit Medical Systems | NYSE Composite vs. Catalent | NYSE Composite vs. Titan Machinery |
| ProShares vs. FlexShares STOXX Global | ProShares vs. SPDR SP Global | ProShares vs. iShares Infrastructure ETF | ProShares vs. iShares Global Infrastructure |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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