Correlation Between IPath Series and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both IPath Series and ProShares Trust 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 IPath Series and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and ProShares Trust , you can compare the effects of market volatilities on IPath Series and ProShares Trust 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 IPath Series with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and ProShares Trust.
Diversification Opportunities for IPath Series and ProShares Trust
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IPath and ProShares is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and IPath Series 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 iPath Series B are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of IPath Series i.e., IPath Series and ProShares Trust go up and down completely randomly.
Pair Corralation between IPath Series and ProShares Trust
Considering the 90-day investment horizon iPath Series B is expected to under-perform the ProShares Trust. In addition to that, IPath Series is 1.44 times more volatile than ProShares Trust . It trades about -0.07 of its total potential returns per unit of risk. ProShares Trust is currently generating about 0.22 per unit of volatility. If you would invest 2,119 in ProShares Trust on November 18, 2024 and sell it today you would earn a total of 171.00 from holding ProShares Trust or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPath Series B vs. ProShares Trust
Performance |
| Timeline |
| iPath Series B |
| ProShares Trust |
IPath Series and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and ProShares Trust
The main advantage of trading using opposite IPath Series and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 Year |
| ProShares Trust vs. AXS TSLA Bear | ProShares Trust vs. Tuttle Capital Short | ProShares Trust vs. ProShares Bitcoin Strategy | ProShares Trust vs. ProShares UltraShort Bloomberg |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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