Correlation Between MicroSectors Solactive and ProShares Big

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

By analyzing existing cross correlation between MicroSectors Solactive FANG and ProShares Big Data, you can compare the effects of market volatilities on MicroSectors Solactive and ProShares Big 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 MicroSectors Solactive with a short position of ProShares Big. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Solactive and ProShares Big.

Diversification Opportunities for MicroSectors Solactive and ProShares Big

0.93

Correlation Coefficient

MicroSectors Solactive  ProShares Big

Almost no diversification

The 3 months correlation between MicroSectors and ProShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG and ProShares Big Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Big Data and MicroSectors Solactive 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 MicroSectors Solactive FANG are associated (or correlated) with ProShares Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Big Data has no effect on the direction of MicroSectors Solactive i.e., MicroSectors Solactive and ProShares Big go up and down completely randomly.

Pair Corralation between MicroSectors Solactive and ProShares Big

Given the investment horizon of 90 days MicroSectors Solactive FANG is expected to generate 3.07 times more return on investment than ProShares Big. However, MicroSectors Solactive is 3.07 times more volatile than ProShares Big Data. It trades about 0.3 of its potential returns per unit of risk. ProShares Big Data is currently generating about 0.2 per unit of risk. If you would invest  9,963  in MicroSectors Solactive FANG on April 25, 2025 and sell it today you would earn a total of  8,617  from holding MicroSectors Solactive FANG or generate 86.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

MicroSectors Solactive FANG  vs.  ProShares Big Data

MicroSectors Solactive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors Solactive FANG are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, MicroSectors Solactive showed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Big Data

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Big Data are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ProShares Big unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroSectors Solactive and ProShares Big

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

The idea behind MicroSectors Solactive FANG and ProShares Big Data 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.