Correlation Between IShares Small and ProShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both IShares Small 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 IShares Small and ProShares Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Small Cap and ProShares Nasdaq 100 Dorsey, you can compare the effects of market volatilities on IShares Small 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 IShares Small with a short position of ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Small and ProShares Nasdaq.
Diversification Opportunities for IShares Small and ProShares Nasdaq
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Small Cap 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 IShares Small 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 iShares Small Cap 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 IShares Small i.e., IShares Small and ProShares Nasdaq go up and down completely randomly.
Pair Corralation between IShares Small and ProShares Nasdaq
Given the investment horizon of 90 days iShares Small Cap is expected to generate 1.95 times more return on investment than ProShares Nasdaq. However, IShares Small is 1.95 times more volatile than ProShares Nasdaq 100 Dorsey. It trades about 0.22 of its potential returns per unit of risk. ProShares Nasdaq 100 Dorsey is currently generating about 0.14 per unit of risk. If you would invest 3,215 in iShares Small Cap on August 30, 2024 and sell it today you would earn a total of 358.00 from holding iShares Small Cap or generate 11.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Small Cap vs. ProShares Nasdaq 100 Dorsey
Performance |
| Timeline |
| iShares Small Cap |
| ProShares Nasdaq 100 |
IShares Small and ProShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Small and ProShares Nasdaq
The main advantage of trading using opposite IShares Small and ProShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Small 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.| IShares Small vs. Horizon Kinetics Inflation | IShares Small vs. Virtus ETF Trust | IShares Small vs. Invesco SP SmallCap | IShares Small vs. iShares MSCI USA |
| ProShares Nasdaq vs. iShares MSCI USA | ProShares Nasdaq vs. iShares MSCI USA | ProShares Nasdaq vs. iShares MSCI USA | ProShares Nasdaq vs. iShares Expanded Tech Software |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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