Correlation Between ProShares and FlexShares STOXX
Can any of the company-specific risk be diversified away by investing in both ProShares and FlexShares STOXX 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 STOXX 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 STOXX Global, you can compare the effects of market volatilities on ProShares and FlexShares STOXX 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 STOXX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and FlexShares STOXX.
Diversification Opportunities for ProShares and FlexShares STOXX
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ProShares and FlexShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ProShares DJ Brookfield and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of ProShares i.e., ProShares and FlexShares STOXX go up and down completely randomly.
Pair Corralation between ProShares and FlexShares STOXX
Given the investment horizon of 90 days ProShares DJ Brookfield is expected to generate 1.1 times more return on investment than FlexShares STOXX. However, ProShares is 1.1 times more volatile than FlexShares STOXX Global. It trades about 0.18 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.13 per unit of risk. If you would invest 4,530 in ProShares DJ Brookfield on August 30, 2024 and sell it today you would earn a total of 707.00 from holding ProShares DJ Brookfield or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares DJ Brookfield vs. FlexShares STOXX Global
Performance |
| Timeline |
| ProShares DJ Brookfield |
| FlexShares STOXX Global |
ProShares and FlexShares STOXX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and FlexShares STOXX
The main advantage of trading using opposite ProShares and FlexShares STOXX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, FlexShares STOXX 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 STOXX will offset losses from the drop in FlexShares STOXX's long position.| ProShares vs. FlexShares STOXX Global | ProShares vs. SPDR SP Global | ProShares vs. iShares Infrastructure ETF | ProShares vs. iShares Global Infrastructure |
| FlexShares STOXX vs. ProShares DJ Brookfield | FlexShares STOXX vs. iShares Global Infrastructure | FlexShares STOXX vs. SPDR SP Global | FlexShares STOXX vs. iShares Infrastructure ETF |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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