Correlation Between IShares Trust and ProShares Long

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

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

Diversification Opportunities for IShares Trust and ProShares Long

0.76

Correlation Coefficient

IShares Trust  ProShares Long

Poor diversification

The 3 months correlation between IShares and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and ProShares Long go up and down completely randomly.

Pair Corralation between IShares Trust and ProShares Long

Given the investment horizon of 90 days IShares Trust is expected to generate 4.81 times less return on investment than ProShares Long. But when comparing it to its historical volatility, iShares Trust is 3.95 times less risky than ProShares Long. It trades about 0.15 of its potential returns per unit of risk. ProShares Long OnlineShort is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,840  in ProShares Long OnlineShort on May 11, 2025 and sell it today you would earn a total of  585.00  from holding ProShares Long OnlineShort or generate 12.09% return on investment over 90 days.

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

iShares Trust   vs.  ProShares Long OnlineShort

iShares Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares Long Onlin

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Long OnlineShort are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, ProShares Long may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares Trust and ProShares Long

The main advantage of trading using opposite IShares Trust and ProShares Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares Trust 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.