Correlation Between Dimensional Small and ProShares Long

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

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

Diversification Opportunities for Dimensional Small and ProShares Long

0.93

Correlation Coefficient

Dimensional Small  ProShares Long

Almost no diversification

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

Pair Corralation between Dimensional Small and ProShares Long

Given the investment horizon of 90 days Dimensional Small is expected to generate 1.44 times less return on investment than ProShares Long. In addition to that, Dimensional Small is 1.2 times more volatile than ProShares Long OnlineShort. It trades about 0.21 of its total potential returns per unit of risk. ProShares Long OnlineShort is currently generating about 0.36 per unit of volatility. If you would invest  4,493  in ProShares Long OnlineShort on April 25, 2025 and sell it today you would earn a total of  985.20  from holding ProShares Long OnlineShort or generate 21.93% return on investment over 90 days.

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

Dimensional Small Cap  vs.  ProShares Long OnlineShort

Dimensional Small Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Small Cap are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dimensional Small unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares Long Onlin

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Long OnlineShort are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, ProShares Long showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dimensional Small and ProShares Long

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

The idea behind Dimensional Small Cap and ProShares Long OnlineShort 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.