Correlation Between ProShares and IShares Edge
Can any of the company-specific risk be diversified away by investing in both ProShares and IShares Edge 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 IShares Edge 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 iShares Edge Investment, you can compare the effects of market volatilities on ProShares and IShares Edge 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 IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and IShares Edge.
Diversification Opportunities for ProShares and IShares Edge
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and IShares is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and iShares Edge Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge Investment 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 IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge Investment has no effect on the direction of ProShares i.e., ProShares and IShares Edge go up and down completely randomly.
Pair Corralation between ProShares and IShares Edge
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 1.97 times more return on investment than IShares Edge. However, ProShares is 1.97 times more volatile than iShares Edge Investment. It trades about 0.38 of its potential returns per unit of risk. iShares Edge Investment is currently generating about 0.13 per unit of risk. If you would invest 6,120 in ProShares SP 500 on September 5, 2024 and sell it today you would earn a total of 417.00 from holding ProShares SP 500 or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. iShares Edge Investment
Performance |
| Timeline |
| ProShares SP 500 |
| iShares Edge Investment |
ProShares and IShares Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and IShares Edge
The main advantage of trading using opposite ProShares and IShares Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, IShares Edge 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 IShares Edge will offset losses from the drop in IShares Edge's long position.| ProShares vs. Vanguard Total Stock | ProShares vs. SPDR SP 500 | ProShares vs. iShares Core SP | ProShares vs. Vanguard Dividend Appreciation |
| IShares Edge vs. iShares iBoxx High | IShares Edge vs. iShares 1 3 Year | IShares Edge vs. iShares TIPS Bond | IShares Edge vs. iShares 7 10 Year |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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