Correlation Between ProShares and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both ProShares and SPDR 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 SPDR 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 SPDR Russell Small, you can compare the effects of market volatilities on ProShares and SPDR 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 SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and SPDR Russell.
Diversification Opportunities for ProShares and SPDR Russell
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP MidCap and SPDR Russell Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell Small 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 SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell Small has no effect on the direction of ProShares i.e., ProShares and SPDR Russell go up and down completely randomly.
Pair Corralation between ProShares and SPDR Russell
Given the investment horizon of 90 days ProShares is expected to generate 1.3 times less return on investment than SPDR Russell. But when comparing it to its historical volatility, ProShares SP MidCap is 1.1 times less risky than SPDR Russell. It trades about 0.05 of its potential returns per unit of risk. SPDR Russell Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,266 in SPDR Russell Small on August 24, 2024 and sell it today you would earn a total of 1,501 from holding SPDR Russell Small or generate 35.19% 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. SPDR Russell Small
Performance |
| Timeline |
| ProShares SP MidCap |
| SPDR Russell Small |
ProShares and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and SPDR Russell
The main advantage of trading using opposite ProShares and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, SPDR 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 SPDR Russell will offset losses from the drop in SPDR Russell's long position.| ProShares vs. Vanguard Mid Cap Index | ProShares vs. Vanguard Extended Market | ProShares vs. iShares Core SP | ProShares vs. iShares Russell Mid Cap |
| SPDR Russell vs. SPDR Portfolio SP | SPDR Russell vs. SPDR SP World | SPDR Russell vs. SPDR Portfolio SP | SPDR Russell vs. SPDR Portfolio Emerging |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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