Correlation Between SPDR SP and ProShares Short
Can any of the company-specific risk be diversified away by investing in both SPDR SP and ProShares Short 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 SPDR SP and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and ProShares Short Russell2000, you can compare the effects of market volatilities on SPDR SP and ProShares Short 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 SPDR SP with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ProShares Short.
Diversification Opportunities for SPDR SP and ProShares Short
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and ProShares is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and ProShares Short Russell2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Russ and SPDR SP 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 SPDR SP 500 are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Russ has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares Short go up and down completely randomly.
Pair Corralation between SPDR SP and ProShares Short
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 0.6 times more return on investment than ProShares Short. However, SPDR SP 500 is 1.66 times less risky than ProShares Short. It trades about 0.13 of its potential returns per unit of risk. ProShares Short Russell2000 is currently generating about -0.09 per unit of risk. If you would invest 52,508 in SPDR SP 500 on September 2, 2024 and sell it today you would earn a total of 7,747 from holding SPDR SP 500 or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. ProShares Short Russell2000
Performance |
| Timeline |
| SPDR SP 500 |
| ProShares Short Russ |
SPDR SP and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ProShares Short
The main advantage of trading using opposite SPDR SP and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares Short MidCap400 | ProShares Short vs. ProShares UltraShort Russell2000 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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