Correlation Between WisdomTree Corporate and ProShares
Can any of the company-specific risk be diversified away by investing in both WisdomTree Corporate 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 WisdomTree Corporate and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Corporate Bond and ProShares SP 500, you can compare the effects of market volatilities on WisdomTree Corporate 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 WisdomTree Corporate with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Corporate and ProShares.
Diversification Opportunities for WisdomTree Corporate and ProShares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and ProShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Corporate Bond and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and WisdomTree Corporate 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 WisdomTree Corporate Bond 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 SP 500 has no effect on the direction of WisdomTree Corporate i.e., WisdomTree Corporate and ProShares go up and down completely randomly.
Pair Corralation between WisdomTree Corporate and ProShares
Given the investment horizon of 90 days WisdomTree Corporate is expected to generate 5.23 times less return on investment than ProShares. But when comparing it to its historical volatility, WisdomTree Corporate Bond is 2.29 times less risky than ProShares. It trades about 0.06 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,015 in ProShares SP 500 on September 12, 2024 and sell it today you would earn a total of 1,543 from holding ProShares SP 500 or generate 30.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 64.11% |
| Values | Daily Returns |
WisdomTree Corporate Bond vs. ProShares SP 500
Performance |
| Timeline |
| WisdomTree Corporate Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ProShares SP 500 |
WisdomTree Corporate and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Corporate and ProShares
The main advantage of trading using opposite WisdomTree Corporate and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Corporate 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.| WisdomTree Corporate vs. WisdomTree Yield Enhanced | WisdomTree Corporate vs. iShares Edge Investment | WisdomTree Corporate vs. FlexShares Credit Scored Long |
| ProShares vs. Vanguard SP 500 | ProShares vs. Vanguard Real Estate | ProShares vs. Vanguard Total Bond | ProShares vs. Vanguard High Dividend |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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