Correlation Between ProShares and FlexShares Morningstar
Can any of the company-specific risk be diversified away by investing in both ProShares and FlexShares Morningstar 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 FlexShares Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares DJ Brookfield and FlexShares Morningstar Global, you can compare the effects of market volatilities on ProShares and FlexShares Morningstar 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 FlexShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and FlexShares Morningstar.
Diversification Opportunities for ProShares and FlexShares Morningstar
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between ProShares and FlexShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ProShares DJ Brookfield and FlexShares Morningstar Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Morningstar 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 DJ Brookfield are associated (or correlated) with FlexShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Morningstar has no effect on the direction of ProShares i.e., ProShares and FlexShares Morningstar go up and down completely randomly.
Pair Corralation between ProShares and FlexShares Morningstar
Given the investment horizon of 90 days ProShares DJ Brookfield is expected to generate 0.8 times more return on investment than FlexShares Morningstar. However, ProShares DJ Brookfield is 1.25 times less risky than FlexShares Morningstar. It trades about 0.22 of its potential returns per unit of risk. FlexShares Morningstar Global is currently generating about -0.12 per unit of risk. If you would invest 5,044 in ProShares DJ Brookfield on August 28, 2024 and sell it today you would earn a total of 164.00 from holding ProShares DJ Brookfield or generate 3.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares DJ Brookfield vs. FlexShares Morningstar Global
Performance |
| Timeline |
| ProShares DJ Brookfield |
| FlexShares Morningstar |
ProShares and FlexShares Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and FlexShares Morningstar
The main advantage of trading using opposite ProShares and FlexShares Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, FlexShares Morningstar 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 FlexShares Morningstar will offset losses from the drop in FlexShares Morningstar's long position.| ProShares vs. FlexShares STOXX Global | ProShares vs. SPDR SP Global | ProShares vs. iShares Infrastructure ETF | ProShares vs. iShares Global Infrastructure |
| FlexShares Morningstar vs. SPDR SP Global | FlexShares Morningstar vs. FlexShares STOXX Global | FlexShares Morningstar vs. SPDR SP North | FlexShares Morningstar vs. FlexShares iBoxx 3 Year |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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