Correlation Between ProShares Big and IShares Semiconductor

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

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

Diversification Opportunities for ProShares Big and IShares Semiconductor

-0.66

Correlation Coefficient

ProShares Big  IShares Semiconductor

Excellent diversification

The 3 months correlation between ProShares and IShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Big Data and iShares Semiconductor ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Semiconductor ETF and ProShares Big 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 Big Data are associated (or correlated) with IShares Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Semiconductor ETF has no effect on the direction of ProShares Big i.e., ProShares Big and IShares Semiconductor go up and down completely randomly.

Pair Corralation between ProShares Big and IShares Semiconductor

Considering the 90-day investment horizon ProShares Big Data is expected to generate 0.87 times more return on investment than IShares Semiconductor. However, ProShares Big Data is 1.15 times less risky than IShares Semiconductor. It trades about 0.26 of its potential returns per unit of risk. iShares Semiconductor ETF is currently generating about -0.03 per unit of risk. If you would invest  3,537  in ProShares Big Data on September 23, 2024 and sell it today you would earn a total of  1,022  from holding ProShares Big Data or generate 28.89% return on investment over 90 days.

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

ProShares Big Data  vs.  iShares Semiconductor ETF

ProShares Big Data

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Big Data are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ProShares Big unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Semiconductor ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Big and IShares Semiconductor

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

The idea behind ProShares Big Data and iShares Semiconductor ETF 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.