Correlation Between ProShares Inflation and First Trust
Can any of the company-specific risk be diversified away by investing in both ProShares Inflation and First Trust 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 Inflation and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Inflation Expectations and First Trust TCW, you can compare the effects of market volatilities on ProShares Inflation and First Trust 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 Inflation with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Inflation and First Trust.
Diversification Opportunities for ProShares Inflation and First Trust
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and First is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Inflation Expectatio and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and ProShares Inflation 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 Inflation Expectations are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of ProShares Inflation i.e., ProShares Inflation and First Trust go up and down completely randomly.
Pair Corralation between ProShares Inflation and First Trust
Given the investment horizon of 90 days ProShares Inflation Expectations is expected to generate 3.14 times more return on investment than First Trust. However, ProShares Inflation is 3.14 times more volatile than First Trust TCW. It trades about 0.04 of its potential returns per unit of risk. First Trust TCW is currently generating about -0.13 per unit of risk. If you would invest 3,313 in ProShares Inflation Expectations on August 23, 2024 and sell it today you would earn a total of 17.00 from holding ProShares Inflation Expectations or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Inflation Expectatio vs. First Trust TCW
Performance |
| Timeline |
| ProShares Inflation |
| First Trust TCW |
ProShares Inflation and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Inflation and First Trust
The main advantage of trading using opposite ProShares Inflation and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Inflation position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| ProShares Inflation vs. SPDR SSgA Multi Asset | ProShares Inflation vs. ProShares Hedge Replication | ProShares Inflation vs. ProShares Short 7 10 | ProShares Inflation vs. ProShares Merger ETF |
| First Trust vs. iShares Interest Rate | First Trust vs. iShares Interest Rate | First Trust vs. WisdomTree Interest Rate |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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