Correlation Between ProShares and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both ProShares and 6 Meridian 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 6 Meridian 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 6 Meridian Low, you can compare the effects of market volatilities on ProShares and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and 6 Meridian.
Diversification Opportunities for ProShares and 6 Meridian
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and SIXL is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and 6 Meridian Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Low 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Low has no effect on the direction of ProShares i.e., ProShares and 6 Meridian go up and down completely randomly.
Pair Corralation between ProShares and 6 Meridian
Given the investment horizon of 90 days ProShares SP MidCap is expected to generate 1.49 times more return on investment than 6 Meridian. However, ProShares is 1.49 times more volatile than 6 Meridian Low. It trades about 0.39 of its potential returns per unit of risk. 6 Meridian Low is currently generating about 0.4 per unit of risk. If you would invest 8,037 in ProShares SP MidCap on September 2, 2024 and sell it today you would earn a total of 803.00 from holding ProShares SP MidCap or generate 9.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP MidCap vs. 6 Meridian Low
Performance |
| Timeline |
| ProShares SP MidCap |
| 6 Meridian Low |
ProShares and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and 6 Meridian
The main advantage of trading using opposite ProShares and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
| 6 Meridian vs. 6 Meridian Mega | 6 Meridian vs. ETC 6 Meridian | 6 Meridian vs. 6 Meridian Small | 6 Meridian vs. Two Roads Shared |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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