Correlation Between ProShares and Affinity World
Can any of the company-specific risk be diversified away by investing in both ProShares and Affinity World 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 Affinity World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP 500 and Affinity World Leaders, you can compare the effects of market volatilities on ProShares and Affinity World 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 Affinity World. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Affinity World.
Diversification Opportunities for ProShares and Affinity World
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Affinity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Affinity World Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity World Leaders 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 500 are associated (or correlated) with Affinity World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity World Leaders has no effect on the direction of ProShares i.e., ProShares and Affinity World go up and down completely randomly.
Pair Corralation between ProShares and Affinity World
Given the investment horizon of 90 days ProShares is expected to generate 15.7 times less return on investment than Affinity World. In addition to that, ProShares is 1.11 times more volatile than Affinity World Leaders. It trades about 0.01 of its total potential returns per unit of risk. Affinity World Leaders is currently generating about 0.12 per unit of volatility. If you would invest 3,000 in Affinity World Leaders on October 22, 2024 and sell it today you would earn a total of 53.00 from holding Affinity World Leaders or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. Affinity World Leaders
Performance |
| Timeline |
| ProShares SP 500 |
| Affinity World Leaders |
ProShares and Affinity World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Affinity World
The main advantage of trading using opposite ProShares and Affinity World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Affinity World 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 Affinity World will offset losses from the drop in Affinity World's long position.| ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares Ultra High |
| Affinity World vs. American Century STOXX | Affinity World vs. PIMCO RAFI Dynamic | Affinity World vs. ProShares SP 500 |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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