Correlation Between ProShares and United States
Can any of the company-specific risk be diversified away by investing in both ProShares and United States 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 United States 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 United States Oil, you can compare the effects of market volatilities on ProShares and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and United States.
Diversification Opportunities for ProShares and United States
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ProShares and United is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares K-1 Free and United States Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Oil 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Oil has no effect on the direction of ProShares i.e., ProShares and United States go up and down completely randomly.
Pair Corralation between ProShares and United States
Given the investment horizon of 90 days ProShares is expected to generate 1.18 times less return on investment than United States. But when comparing it to its historical volatility, ProShares K 1 Free is 1.33 times less risky than United States. It trades about 0.3 of its potential returns per unit of risk. United States Oil is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,362 in United States Oil on December 30, 2023 and sell it today you would earn a total of 511.00 from holding United States Oil or generate 6.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares K-1 Free vs. United States Oil
Performance |
Timeline |
ProShares K-1 Free |
United States Oil |
ProShares and United States Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares and United States
The main advantage of trading using opposite ProShares and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.ProShares vs. Drum Income Plus | ProShares vs. EA Series Trust | ProShares vs. Global X MLP | ProShares vs. ETRACS Quarterly Pay |
United States vs. Drum Income Plus | United States vs. EA Series Trust | United States vs. Global X MLP | United States vs. ETRACS Quarterly Pay |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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