Correlation Between ProShares Trust and First Trust

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

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

Diversification Opportunities for ProShares Trust and First Trust

-0.88

Correlation Coefficient

ProShares Trust  First Trust

Pay attention - limited upside

The 3 months correlation between ProShares and First is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust and ProShares 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 ProShares Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and First Trust go up and down completely randomly.

Pair Corralation between ProShares Trust and First Trust

If you would invest  2,328  in ProShares Trust on September 28, 2024 and sell it today you would earn a total of  10.00  from holding ProShares Trust or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

ProShares Trust   vs.  First Trust

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

First Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Trust and First Trust

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

The idea behind ProShares Trust and First Trust 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.