Correlation Between ProShares and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both ProShares and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Nasdaq 100, you can compare the effects of market volatilities on ProShares and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Goldman Sachs.
Diversification Opportunities for ProShares and Goldman Sachs
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Goldman is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and Goldman Sachs Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Nasdaq 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Nasdaq has no effect on the direction of ProShares i.e., ProShares and Goldman Sachs go up and down completely randomly.
Pair Corralation between ProShares and Goldman Sachs
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 1.28 times more return on investment than Goldman Sachs. However, ProShares is 1.28 times more volatile than Goldman Sachs Nasdaq 100. It trades about 0.31 of its potential returns per unit of risk. Goldman Sachs Nasdaq 100 is currently generating about 0.12 per unit of risk. If you would invest 8,083 in ProShares SP MidCap on August 26, 2024 and sell it today you would earn a total of 681.00 from holding ProShares SP MidCap or generate 8.43% 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. Goldman Sachs Nasdaq 100
Performance |
| Timeline |
| ProShares SP MidCap |
| Goldman Sachs Nasdaq |
ProShares and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Goldman Sachs
The main advantage of trading using opposite ProShares and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| ProShares vs. Vanguard Mid Cap Index | ProShares vs. Vanguard Extended Market | ProShares vs. iShares Core SP | ProShares vs. SPDR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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