Correlation Between ProShares Smart and Freedom Day
Can any of the company-specific risk be diversified away by investing in both ProShares Smart and Freedom Day 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 Smart and Freedom Day into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Smart Materials and Freedom Day Dividend, you can compare the effects of market volatilities on ProShares Smart and Freedom Day 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 Smart with a short position of Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Smart and Freedom Day.
Diversification Opportunities for ProShares Smart and Freedom Day
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Freedom is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Smart Materials and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and ProShares Smart 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 Smart Materials are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of ProShares Smart i.e., ProShares Smart and Freedom Day go up and down completely randomly.
Pair Corralation between ProShares Smart and Freedom Day
Given the investment horizon of 90 days ProShares Smart Materials is expected to under-perform the Freedom Day. In addition to that, ProShares Smart is 1.57 times more volatile than Freedom Day Dividend. It trades about -0.04 of its total potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.01 per unit of volatility. If you would invest 3,423 in Freedom Day Dividend on November 28, 2024 and sell it today you would lose (6.00) from holding Freedom Day Dividend or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Smart Materials vs. Freedom Day Dividend
Performance |
| Timeline |
| ProShares Smart Materials |
| Freedom Day Dividend |
ProShares Smart and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Smart and Freedom Day
The main advantage of trading using opposite ProShares Smart and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Smart position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day's long position.| ProShares Smart vs. Strategy Shares | ProShares Smart vs. Freedom Day Dividend | ProShares Smart vs. Franklin Templeton ETF | ProShares Smart vs. iShares MSCI China |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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