Correlation Between ProShares Long and C WorldWide

Can any of the company-specific risk be diversified away by investing in both ProShares Long and C WorldWide 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 Long and C WorldWide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Long OnlineShort and C WorldWide Emerging, you can compare the effects of market volatilities on ProShares Long and C WorldWide 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 Long with a short position of C WorldWide. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Long and C WorldWide.

Diversification Opportunities for ProShares Long and C WorldWide

0.88

Correlation Coefficient

ProShares Long  C WorldWide

Very poor diversification

The 3 months correlation between ProShares and CWIEMMKL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Long OnlineShort and C WorldWide Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C WorldWide Emerging and ProShares Long 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 Long OnlineShort are associated (or correlated) with C WorldWide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C WorldWide Emerging has no effect on the direction of ProShares Long i.e., ProShares Long and C WorldWide go up and down completely randomly.

Pair Corralation between ProShares Long and C WorldWide

Given the investment horizon of 90 days ProShares Long OnlineShort is expected to generate 1.08 times more return on investment than C WorldWide. However, ProShares Long is 1.08 times more volatile than C WorldWide Emerging. It trades about 0.14 of its potential returns per unit of risk. C WorldWide Emerging is currently generating about 0.07 per unit of risk. If you would invest  4,020  in ProShares Long OnlineShort on January 26, 2024 and sell it today you would earn a total of  108.00  from holding ProShares Long OnlineShort or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.48%
Values	Daily Returns

ProShares Long OnlineShort  vs.  C WorldWide Emerging

ProShares Long Onlin

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Long OnlineShort are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, ProShares Long showed solid returns over the last few months and may actually be approaching a breakup point.

C WorldWide Emerging

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in C WorldWide Emerging are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, C WorldWide may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with ProShares Long and C WorldWide

The main advantage of trading using opposite ProShares Long and C WorldWide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Long position performs unexpectedly, C WorldWide 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 C WorldWide will offset losses from the drop in C WorldWide's long position.

The idea behind ProShares Long OnlineShort and C WorldWide Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.