Correlation Between ProShares Trust and IShares Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and IShares 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 ProShares Trust and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and iShares Trust , you can compare the effects of market volatilities on ProShares Trust and IShares 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 ProShares Trust with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and IShares Trust.
Diversification Opportunities for ProShares Trust and IShares Trust
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and ProShares Trust 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 Trust are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and IShares Trust go up and down completely randomly.
Pair Corralation between ProShares Trust and IShares Trust
Assuming the 90 days trading horizon ProShares Trust is expected to generate 2.18 times more return on investment than IShares Trust. However, ProShares Trust is 2.18 times more volatile than iShares Trust . It trades about 0.12 of its potential returns per unit of risk. iShares Trust is currently generating about 0.07 per unit of risk. If you would invest 197,000 in ProShares Trust on August 24, 2024 and sell it today you would earn a total of 13,741 from holding ProShares Trust or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. iShares Trust
Performance |
| Timeline |
| ProShares Trust |
| iShares Trust |
ProShares Trust and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and IShares Trust
The main advantage of trading using opposite ProShares Trust and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, IShares 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| ProShares Trust vs. SPDR SP 500 | ProShares Trust vs. Invesco QQQ Trust | ProShares Trust vs. The Select Sector | ProShares Trust vs. Promotora y Operadora |
| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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