Correlation Between ProShares and FT Cboe
Can any of the company-specific risk be diversified away by investing in both ProShares and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on ProShares and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and FT Cboe.
Diversification Opportunities for ProShares and FT Cboe
Poor diversification
The 3 months correlation between ProShares and KNG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of ProShares i.e., ProShares and FT Cboe go up and down completely randomly.
Pair Corralation between ProShares and FT Cboe
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 1.84 times more return on investment than FT Cboe. However, ProShares is 1.84 times more volatile than FT Cboe Vest. It trades about 0.17 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.09 per unit of risk. If you would invest 7,980 in ProShares SP MidCap on August 29, 2024 and sell it today you would earn a total of 825.00 from holding ProShares SP MidCap or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. FT Cboe Vest
Performance |
| Timeline |
| ProShares SP MidCap |
| FT Cboe Vest |
ProShares and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and FT Cboe
The main advantage of trading using opposite ProShares and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
| FT Cboe vs. Global X SP | FT Cboe vs. Global X Nasdaq | FT Cboe vs. First Trust BuyWrite | FT Cboe vs. Amplify CWP Enhanced |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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