Correlation Between ProShares and MFS Active

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

By analyzing existing cross correlation between ProShares SP 500 and MFS Active Value, you can compare the effects of market volatilities on ProShares and MFS Active 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 with a short position of MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and MFS Active.

Diversification Opportunities for ProShares and MFS Active

0.93

Correlation Coefficient

ProShares  MFS Active

Almost no diversification

The 3 months correlation between ProShares and MFS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and MFS Active Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active Value and ProShares 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 SP 500 are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active Value has no effect on the direction of ProShares i.e., ProShares and MFS Active go up and down completely randomly.

Pair Corralation between ProShares and MFS Active

Given the investment horizon of 90 days ProShares is expected to generate 1.05 times less return on investment than MFS Active. In addition to that, ProShares is 1.3 times more volatile than MFS Active Value. It trades about 0.11 of its total potential returns per unit of risk. MFS Active Value is currently generating about 0.15 per unit of volatility. If you would invest  2,466  in MFS Active Value on May 27, 2025 and sell it today you would earn a total of  137.00  from holding MFS Active Value or generate 5.56% return on investment over 90 days.

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

ProShares SP 500  vs.  MFS Active Value

ProShares SP 500

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, ProShares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

MFS Active Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Value are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, MFS Active is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ProShares and MFS Active

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

The idea behind ProShares SP 500 and MFS Active Value 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.