Correlation Between ProShares Metaverse and Global X

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

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

Diversification Opportunities for ProShares Metaverse and Global X

0.84

Correlation Coefficient

ProShares Metaverse  Global X

Very poor diversification

The 3 months correlation between ProShares and Global is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Metaverse ETF and Global X Cybersecurity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cybersecurity and ProShares Metaverse 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 Metaverse ETF are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Cybersecurity has no effect on the direction of ProShares Metaverse i.e., ProShares Metaverse and Global X go up and down completely randomly.

Pair Corralation between ProShares Metaverse and Global X

Given the investment horizon of 90 days ProShares Metaverse ETF is expected to generate 0.96 times more return on investment than Global X. However, ProShares Metaverse ETF is 1.04 times less risky than Global X. It trades about 0.2 of its potential returns per unit of risk. Global X Cybersecurity is currently generating about 0.17 per unit of risk. If you would invest  4,322  in ProShares Metaverse ETF on September 13, 2024 and sell it today you would earn a total of  626.00  from holding ProShares Metaverse ETF or generate 14.48% return on investment over 90 days.

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

ProShares Metaverse ETF  vs.  Global X Cybersecurity

ProShares Metaverse ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Metaverse ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ProShares Metaverse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global X Cybersecurity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cybersecurity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares Metaverse and Global X

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

The idea behind ProShares Metaverse ETF and Global X Cybersecurity 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..