Correlation Between ProShares and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both ProShares and WisdomTree Emerging 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 WisdomTree Emerging 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 WisdomTree Emerging Markets, you can compare the effects of market volatilities on ProShares and WisdomTree Emerging 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 WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and WisdomTree Emerging.
Diversification Opportunities for ProShares and WisdomTree Emerging
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and WisdomTree is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging 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 WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of ProShares i.e., ProShares and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between ProShares and WisdomTree Emerging
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 1.0 times more return on investment than WisdomTree Emerging. However, ProShares is 1.0 times more volatile than WisdomTree Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.05 per unit of risk. If you would invest 6,928 in ProShares SP MidCap on August 28, 2024 and sell it today you would earn a total of 1,951 from holding ProShares SP MidCap or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| ProShares SP MidCap |
| WisdomTree Emerging |
ProShares and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and WisdomTree Emerging
The main advantage of trading using opposite ProShares and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.| ProShares vs. Vanguard Mid Cap Index | ProShares vs. iShares Core SP | ProShares vs. SPDR SP MIDCAP | ProShares vs. First Trust Dorsey |
| WisdomTree Emerging vs. WisdomTree SmallCap Quality | WisdomTree Emerging vs. WisdomTree Japan Hedged | WisdomTree Emerging vs. WisdomTree Interest Rate | WisdomTree Emerging vs. WisdomTree Emerging Markets |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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