Correlation Between Consumer Discretionary and ProShares Online
Can any of the company-specific risk be diversified away by investing in both Consumer Discretionary and ProShares Online 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 Consumer Discretionary and ProShares Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Discretionary Select and ProShares Online Retail, you can compare the effects of market volatilities on Consumer Discretionary and ProShares Online 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 Consumer Discretionary with a short position of ProShares Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Discretionary and ProShares Online.
Diversification Opportunities for Consumer Discretionary and ProShares Online
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consumer and ProShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Discretionary Select and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail and Consumer Discretionary 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 Consumer Discretionary Select are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of Consumer Discretionary i.e., Consumer Discretionary and ProShares Online go up and down completely randomly.
Pair Corralation between Consumer Discretionary and ProShares Online
Considering the 90-day investment horizon Consumer Discretionary Select is expected to generate 0.72 times more return on investment than ProShares Online. However, Consumer Discretionary Select is 1.4 times less risky than ProShares Online. It trades about 0.07 of its potential returns per unit of risk. ProShares Online Retail is currently generating about 0.05 per unit of risk. If you would invest 14,339 in Consumer Discretionary Select on August 23, 2024 and sell it today you would earn a total of 7,123 from holding Consumer Discretionary Select or generate 49.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Discretionary Select vs. ProShares Online Retail
Performance |
| Timeline |
| Consumer Discretionary |
| ProShares Online Retail |
Consumer Discretionary and ProShares Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Discretionary and ProShares Online
The main advantage of trading using opposite Consumer Discretionary and ProShares Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Discretionary position performs unexpectedly, ProShares Online 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 Online will offset losses from the drop in ProShares Online's long position.| Consumer Discretionary vs. Consumer Staples Select | Consumer Discretionary vs. Industrial Select Sector | Consumer Discretionary vs. Materials Select Sector | Consumer Discretionary vs. Health Care Select |
| ProShares Online vs. iShares Global Industrials | ProShares Online vs. iShares Global Consumer | ProShares Online vs. iShares Global Utilities | ProShares Online vs. iShares Global Financials |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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