Correlation Between ProShares and Invesco Russell
Can any of the company-specific risk be diversified away by investing in both ProShares and Invesco Russell 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 Invesco Russell 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 Invesco Russell 1000, you can compare the effects of market volatilities on ProShares and Invesco Russell 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 Invesco Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Invesco Russell.
Diversification Opportunities for ProShares and Invesco Russell
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and Invesco Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Russell 1000 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 Invesco Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Russell 1000 has no effect on the direction of ProShares i.e., ProShares and Invesco Russell go up and down completely randomly.
Pair Corralation between ProShares and Invesco Russell
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 1.18 times more return on investment than Invesco Russell. However, ProShares is 1.18 times more volatile than Invesco Russell 1000. It trades about 0.15 of its potential returns per unit of risk. Invesco Russell 1000 is currently generating about 0.15 per unit of risk. If you would invest 7,428 in ProShares SP MidCap on September 1, 2024 and sell it today you would earn a total of 1,412 from holding ProShares SP MidCap or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
ProShares SP MidCap vs. Invesco Russell 1000
Performance |
| Timeline |
| ProShares SP MidCap |
| Invesco Russell 1000 |
ProShares and Invesco Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Invesco Russell
The main advantage of trading using opposite ProShares and Invesco Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Invesco Russell 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 Invesco Russell will offset losses from the drop in Invesco Russell's long position.| ProShares vs. iShares Small Cap | ProShares vs. Invesco ESG NASDAQ | ProShares vs. Invesco ESG NASDAQ | ProShares vs. BlackRock Carbon Transition |
| Invesco Russell vs. Invesco SP 100 | Invesco Russell vs. iShares MSCI USA | Invesco Russell vs. Invesco DWA SmallCap | Invesco Russell vs. Schwab Fundamental Broad |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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