Correlation Between ProShares Hedge and IShares ESG

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Can any of the company-specific risk be diversified away by investing in both ProShares Hedge and IShares ESG 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 Hedge and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Hedge Replication and iShares ESG USD, you can compare the effects of market volatilities on ProShares Hedge and IShares ESG 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 Hedge with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Hedge and IShares ESG.

Diversification Opportunities for ProShares Hedge and IShares ESG

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between ProShares and IShares is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Hedge Replication and iShares ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG USD and ProShares Hedge 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 Hedge Replication are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG USD has no effect on the direction of ProShares Hedge i.e., ProShares Hedge and IShares ESG go up and down completely randomly.

Pair Corralation between ProShares Hedge and IShares ESG

Considering the 90-day investment horizon ProShares Hedge Replication is expected to generate 0.85 times more return on investment than IShares ESG. However, ProShares Hedge Replication is 1.18 times less risky than IShares ESG. It trades about 0.03 of its potential returns per unit of risk. iShares ESG USD is currently generating about 0.0 per unit of risk. If you would invest  4,544  in ProShares Hedge Replication on January 17, 2024 and sell it today you would earn a total of  317.00  from holding ProShares Hedge Replication or generate 6.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ProShares Hedge Replication  vs.  iShares ESG USD

 Performance 
       Timeline  
ProShares Hedge Repl 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Hedge Replication are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ProShares Hedge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
iShares ESG USD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares ESG USD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares ESG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ProShares Hedge and IShares ESG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares Hedge and IShares ESG

The main advantage of trading using opposite ProShares Hedge and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Hedge position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.
The idea behind ProShares Hedge Replication and iShares ESG USD 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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