Correlation Between ProShares and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both ProShares and Invesco DWA 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 Invesco DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP Technology and Invesco DWA Utilities, you can compare the effects of market volatilities on ProShares and Invesco DWA 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 Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Invesco DWA.
Diversification Opportunities for ProShares and Invesco DWA
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Invesco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP Technology and Invesco DWA Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Utilities 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 Technology are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Utilities has no effect on the direction of ProShares i.e., ProShares and Invesco DWA go up and down completely randomly.
Pair Corralation between ProShares and Invesco DWA
Considering the 90-day investment horizon ProShares SP Technology is expected to generate 1.11 times more return on investment than Invesco DWA. However, ProShares is 1.11 times more volatile than Invesco DWA Utilities. It trades about 0.07 of its potential returns per unit of risk. Invesco DWA Utilities is currently generating about 0.06 per unit of risk. If you would invest 5,617 in ProShares SP Technology on August 30, 2024 and sell it today you would earn a total of 2,105 from holding ProShares SP Technology or generate 37.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP Technology vs. Invesco DWA Utilities
Performance |
| Timeline |
| ProShares SP Technology |
| Invesco DWA Utilities |
ProShares and Invesco DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Invesco DWA
The main advantage of trading using opposite ProShares and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Invesco DWA 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 Invesco DWA will offset losses from the drop in Invesco DWA's long position.| ProShares vs. Nexalin Technology | ProShares vs. Kilroy Realty Corp | ProShares vs. Highwoods Properties | ProShares vs. Karat Packaging |
| Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco Dynamic Large |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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