Correlation Between ProShares and Main Buywrite
Can any of the company-specific risk be diversified away by investing in both ProShares and Main Buywrite 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 Main Buywrite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP MidCap and Main Buywrite ETF, you can compare the effects of market volatilities on ProShares and Main Buywrite 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 Main Buywrite. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Main Buywrite.
Diversification Opportunities for ProShares and Main Buywrite
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Main is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and Main Buywrite ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Buywrite ETF 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 MidCap are associated (or correlated) with Main Buywrite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Buywrite ETF has no effect on the direction of ProShares i.e., ProShares and Main Buywrite go up and down completely randomly.
Pair Corralation between ProShares and Main Buywrite
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 4.96 times more return on investment than Main Buywrite. However, ProShares is 4.96 times more volatile than Main Buywrite ETF. It trades about 0.27 of its potential returns per unit of risk. Main Buywrite ETF is currently generating about 0.07 per unit of risk. If you would invest 8,159 in ProShares SP MidCap on August 25, 2024 and sell it today you would earn a total of 605.00 from holding ProShares SP MidCap or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. Main Buywrite ETF
Performance |
| Timeline |
| ProShares SP MidCap |
| Main Buywrite ETF |
ProShares and Main Buywrite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Main Buywrite
The main advantage of trading using opposite ProShares and Main Buywrite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Main Buywrite 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 Main Buywrite will offset losses from the drop in Main Buywrite's long position.| ProShares vs. Vanguard Mid Cap Index | ProShares vs. Vanguard Extended Market | ProShares vs. iShares Core SP | ProShares vs. iShares Russell Mid Cap |
| Main Buywrite vs. Global X SP | Main Buywrite vs. First Trust BuyWrite | Main Buywrite vs. Amplify CWP Enhanced | Main Buywrite vs. ProShares SP MidCap |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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