Correlation Between ProShares Trust and Davis Select
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and Davis Select 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 Trust and Davis Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and Davis Select International, you can compare the effects of market volatilities on ProShares Trust and Davis Select 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 Trust with a short position of Davis Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and Davis Select.
Diversification Opportunities for ProShares Trust and Davis Select
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProShares and Davis is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Davis Select International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Select Interna and ProShares Trust 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 Trust are associated (or correlated) with Davis Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Select Interna has no effect on the direction of ProShares Trust i.e., ProShares Trust and Davis Select go up and down completely randomly.
Pair Corralation between ProShares Trust and Davis Select
Given the investment horizon of 90 days ProShares Trust is expected to generate 68.35 times less return on investment than Davis Select. In addition to that, ProShares Trust is 3.29 times more volatile than Davis Select International. It trades about 0.0 of its total potential returns per unit of risk. Davis Select International is currently generating about 0.16 per unit of volatility. If you would invest 1,862 in Davis Select International on March 3, 2024 and sell it today you would earn a total of 212.00 from holding Davis Select International or generate 11.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ProShares Trust vs. Davis Select International
Performance |
Timeline |
ProShares Trust |
Davis Select Interna |
ProShares Trust and Davis Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ProShares Trust and Davis Select
The main advantage of trading using opposite ProShares Trust and Davis Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, Davis Select 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 Davis Select will offset losses from the drop in Davis Select's long position.ProShares Trust vs. T Rowe Price | ProShares Trust vs. FT Cboe Vest | ProShares Trust vs. Knife River | ProShares Trust vs. Aston Martin Lagonda |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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