Correlation Between FT Cboe and ProShares Inflation

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

By analyzing existing cross correlation between FT Cboe Vest and ProShares Inflation Expectations, you can compare the effects of market volatilities on FT Cboe and ProShares Inflation 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 FT Cboe with a short position of ProShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and ProShares Inflation.

Diversification Opportunities for FT Cboe and ProShares Inflation

0.8

Correlation Coefficient

FT Cboe  ProShares Inflation

Very poor diversification

The 3 months correlation between BUFD and ProShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and ProShares Inflation Expectatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Inflation and FT Cboe 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 FT Cboe Vest are associated (or correlated) with ProShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Inflation has no effect on the direction of FT Cboe i.e., FT Cboe and ProShares Inflation go up and down completely randomly.

Pair Corralation between FT Cboe and ProShares Inflation

Given the investment horizon of 90 days FT Cboe Vest is expected to generate 1.15 times more return on investment than ProShares Inflation. However, FT Cboe is 1.15 times more volatile than ProShares Inflation Expectations. It trades about 0.33 of its potential returns per unit of risk. ProShares Inflation Expectations is currently generating about 0.09 per unit of risk. If you would invest  2,453  in FT Cboe Vest on April 24, 2025 and sell it today you would earn a total of  230.00  from holding FT Cboe Vest or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

FT Cboe Vest  vs.  ProShares Inflation Expectatio

FT Cboe Vest

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FT Cboe may actually be approaching a critical reversion point that can send shares even higher in August 2025.

ProShares Inflation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Inflation Expectations are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FT Cboe and ProShares Inflation

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

The idea behind FT Cboe Vest and ProShares Inflation Expectations 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.