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
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and ProShares is 0.91. 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 8,739 from holding MicroSectors Solactive FANG or generate 87.71% 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
Performance |
Timeline |
MicroSectors Solactive |
ProShares Big Data |
MicroSectors Solactive and ProShares Big Volatility Contrast
Predicted Return Density |
Returns |
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.MicroSectors Solactive vs. Bank of Montreal | MicroSectors Solactive vs. Direxion Daily Dow | MicroSectors Solactive vs. Bank of Montreal | MicroSectors Solactive vs. Direxion Daily Semiconductor |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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