Correlation Between SPDR Portfolio and ProShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and ProShares Nasdaq 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 Portfolio and ProShares Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and ProShares Nasdaq 100 Dorsey, you can compare the effects of market volatilities on SPDR Portfolio and ProShares Nasdaq 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 Portfolio with a short position of ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and ProShares Nasdaq.
Diversification Opportunities for SPDR Portfolio and ProShares Nasdaq
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and ProShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and ProShares Nasdaq 100 Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nasdaq 100 and SPDR Portfolio 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 Portfolio SP are associated (or correlated) with ProShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nasdaq 100 has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and ProShares Nasdaq go up and down completely randomly.
Pair Corralation between SPDR Portfolio and ProShares Nasdaq
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 2.05 times less return on investment than ProShares Nasdaq. But when comparing it to its historical volatility, SPDR Portfolio SP is 1.03 times less risky than ProShares Nasdaq. It trades about 0.09 of its potential returns per unit of risk. ProShares Nasdaq 100 Dorsey is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,456 in ProShares Nasdaq 100 Dorsey on August 28, 2024 and sell it today you would earn a total of 199.00 from holding ProShares Nasdaq 100 Dorsey or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. ProShares Nasdaq 100 Dorsey
Performance |
| Timeline |
| SPDR Portfolio SP |
| ProShares Nasdaq 100 |
SPDR Portfolio and ProShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and ProShares Nasdaq
The main advantage of trading using opposite SPDR Portfolio and ProShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, ProShares Nasdaq 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 Nasdaq will offset losses from the drop in ProShares Nasdaq's long position.| SPDR Portfolio vs. FT Vest Equity | SPDR Portfolio vs. Northern Lights | SPDR Portfolio vs. Dimensional International High | SPDR Portfolio vs. First Trust Exchange Traded |
| ProShares Nasdaq vs. Invesco Dynamic Large | ProShares Nasdaq vs. Perella Weinberg Partners | ProShares Nasdaq vs. HUMANA INC | ProShares Nasdaq vs. Aquagold International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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