Correlation Between SPDR SP and ProShares
Can any of the company-specific risk be diversified away by investing in both SPDR SP and ProShares 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 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 SP 500, you can compare the effects of market volatilities on SPDR SP and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ProShares.
Diversification Opportunities for SPDR SP and ProShares
No risk reduction
The 3 months correlation between SPDR and ProShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of SPDR SP i.e., SPDR SP and ProShares go up and down completely randomly.
Pair Corralation between SPDR SP and ProShares
Considering the 90-day investment horizon SPDR SP is expected to generate 1.03 times less return on investment than ProShares. But when comparing it to its historical volatility, SPDR SP 500 is 1.03 times less risky than ProShares. It trades about 0.14 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,498 in ProShares SP 500 on September 3, 2024 and sell it today you would earn a total of 990.00 from holding ProShares SP 500 or generate 18.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. ProShares SP 500
Performance |
| Timeline |
| SPDR SP 500 |
| ProShares SP 500 |
SPDR SP and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and ProShares
The main advantage of trading using opposite SPDR SP and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
| ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares SP 500 | ProShares vs. ProShares Ultra High |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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