Correlation Between SPDR Morgan and ProShares
Can any of the company-specific risk be diversified away by investing in both SPDR Morgan 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 SPDR Morgan and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Morgan Stanley and ProShares K 1 Free, you can compare the effects of market volatilities on SPDR Morgan 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 SPDR Morgan with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Morgan and ProShares.
Diversification Opportunities for SPDR Morgan and ProShares
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and ProShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Morgan Stanley and ProShares K 1 Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares K 1 and SPDR Morgan 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 SPDR Morgan Stanley 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 K 1 has no effect on the direction of SPDR Morgan i.e., SPDR Morgan and ProShares go up and down completely randomly.
Pair Corralation between SPDR Morgan and ProShares
Given the investment horizon of 90 days SPDR Morgan Stanley is expected to under-perform the ProShares. In addition to that, SPDR Morgan is 1.24 times more volatile than ProShares K 1 Free. It trades about -0.24 of its total potential returns per unit of risk. ProShares K 1 Free is currently generating about 0.1 per unit of volatility. If you would invest 4,720 in ProShares K 1 Free on January 20, 2024 and sell it today you would earn a total of 84.00 from holding ProShares K 1 Free or generate 1.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Morgan Stanley vs. ProShares K 1 Free
Performance |
Timeline |
SPDR Morgan Stanley |
ProShares K 1 |
SPDR Morgan and ProShares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Morgan and ProShares
The main advantage of trading using opposite SPDR Morgan and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Morgan 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.SPDR Morgan vs. ARK Genomic Revolution | SPDR Morgan vs. ARK Innovation ETF | SPDR Morgan vs. ARK Space Exploration |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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