Correlation Between United States and ProShares
Can any of the company-specific risk be diversified away by investing in both United States and ProShares 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 United States and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States 12 and ProShares K 1 Free, you can compare the effects of market volatilities on United States and ProShares 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 United States with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ProShares.
Diversification Opportunities for United States and ProShares
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and ProShares is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding United States 12 and ProShares K 1 Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares K 1 and United States 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 United States 12 are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares K 1 has no effect on the direction of United States i.e., United States and ProShares go up and down completely randomly.
Pair Corralation between United States and ProShares
Considering the 90-day investment horizon United States 12 is expected to generate 1.73 times more return on investment than ProShares. However, United States is 1.73 times more volatile than ProShares K 1 Free. It trades about 0.05 of its potential returns per unit of risk. ProShares K 1 Free is currently generating about 0.03 per unit of risk. If you would invest 721.00 in United States 12 on September 13, 2024 and sell it today you would earn a total of 15.00 from holding United States 12 or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States 12 vs. ProShares K 1 Free
Performance |
| Timeline |
| United States 12 |
| ProShares K 1 |
United States and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and ProShares
The main advantage of trading using opposite United States and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| United States vs. United States 12 | United States vs. United States Gasoline | United States vs. First Trust Natural | United States vs. ProShares UltraShort Bloomberg |
| ProShares vs. SPDR Gold Shares | ProShares vs. iShares Gold Trust | ProShares vs. iShares Silver Trust | ProShares vs. SPDR Gold MiniShares |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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