Correlation Between ProShares and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both ProShares and MicroSectors FANG 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 MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares K 1 Free and MicroSectors FANG Index, you can compare the effects of market volatilities on ProShares and MicroSectors FANG 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 MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and MicroSectors FANG.
Diversification Opportunities for ProShares and MicroSectors FANG
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and MicroSectors is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ProShares K 1 Free and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index 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 K 1 Free are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of ProShares i.e., ProShares and MicroSectors FANG go up and down completely randomly.
Pair Corralation between ProShares and MicroSectors FANG
Given the investment horizon of 90 days ProShares K 1 Free is expected to generate 0.22 times more return on investment than MicroSectors FANG. However, ProShares K 1 Free is 4.63 times less risky than MicroSectors FANG. It trades about 0.13 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about -0.03 per unit of risk. If you would invest 4,474 in ProShares K 1 Free on January 25, 2024 and sell it today you would earn a total of 368.00 from holding ProShares K 1 Free or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
ProShares K 1 Free vs. MicroSectors FANG Index
Performance |
| Timeline |
| ProShares K 1 |
| MicroSectors FANG Index |
ProShares and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and MicroSectors FANG
The main advantage of trading using opposite ProShares and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, MicroSectors FANG 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 MicroSectors FANG will offset losses from the drop in MicroSectors FANG's long position.| ProShares vs. United States 12 | ProShares vs. Credit Suisse X Links | ProShares vs. Invesco DB Oil | ProShares vs. United States 12 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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