Correlation Between ProShares Investment and ProShares Hedge

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

By analyzing existing cross correlation between ProShares Investment GradeInterest and ProShares Hedge Replication, you can compare the effects of market volatilities on ProShares Investment and ProShares Hedge 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 ProShares Investment with a short position of ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Investment and ProShares Hedge.

Diversification Opportunities for ProShares Investment and ProShares Hedge

0.97

Correlation Coefficient

ProShares Investment  ProShares Hedge

Almost no diversification

The 3 months correlation between ProShares and ProShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Investment GradeInte and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl and ProShares Investment 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 ProShares Investment GradeInterest are associated (or correlated) with ProShares Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of ProShares Investment i.e., ProShares Investment and ProShares Hedge go up and down completely randomly.

Pair Corralation between ProShares Investment and ProShares Hedge

Given the investment horizon of 90 days ProShares Investment is expected to generate 1.99 times less return on investment than ProShares Hedge. But when comparing it to its historical volatility, ProShares Investment GradeInterest is 1.47 times less risky than ProShares Hedge. It trades about 0.2 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,935  in ProShares Hedge Replication on July 7, 2025 and sell it today you would earn a total of  200.00  from holding ProShares Hedge Replication or generate 4.05% return on investment over 90 days.

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

ProShares Investment GradeInte  vs.  ProShares Hedge Replication

ProShares Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Investment GradeInterest are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares Hedge Repl

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Hedge Replication are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, ProShares Hedge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Investment and ProShares Hedge

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

The idea behind ProShares Investment GradeInterest and ProShares Hedge Replication 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.