Correlation Between HENDERSON DIVIDEND and ProShares

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Can any of the company-specific risk be diversified away by investing in both HENDERSON DIVIDEND and ProShares 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 HENDERSON DIVIDEND and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HENDERSON DIVIDEND INCOME and ProShares SP Kensho, you can compare the effects of market volatilities on HENDERSON DIVIDEND and ProShares 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 HENDERSON DIVIDEND with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HENDERSON DIVIDEND and ProShares.

Diversification Opportunities for HENDERSON DIVIDEND and ProShares

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between HENDERSON and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding HENDERSON DIVIDEND INCOME and ProShares SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Kensho and HENDERSON DIVIDEND 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 HENDERSON DIVIDEND INCOME are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Kensho has no effect on the direction of HENDERSON DIVIDEND i.e., HENDERSON DIVIDEND and ProShares go up and down completely randomly.

Pair Corralation between HENDERSON DIVIDEND and ProShares

Assuming the 90 days horizon HENDERSON DIVIDEND INCOME is expected to generate 0.47 times more return on investment than ProShares. However, HENDERSON DIVIDEND INCOME is 2.15 times less risky than ProShares. It trades about 0.01 of its potential returns per unit of risk. ProShares SP Kensho is currently generating about -0.03 per unit of risk. If you would invest  1,244  in HENDERSON DIVIDEND INCOME on September 10, 2022 and sell it today you would earn a total of  60.00  from holding HENDERSON DIVIDEND INCOME or generate 4.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy60.76%
ValuesDaily Returns

HENDERSON DIVIDEND INCOME  vs.  ProShares SP Kensho

 Performance (%) 
       Timeline  
HENDERSON DIVIDEND INCOME 
HENDERSON Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HENDERSON DIVIDEND INCOME are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, HENDERSON DIVIDEND may actually be approaching a critical reversion point that can send shares even higher in January 2023.

HENDERSON Price Channel

ProShares SP Kensho 
ProShares Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP Kensho are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, ProShares is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares Price Channel

HENDERSON DIVIDEND and ProShares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HENDERSON DIVIDEND and ProShares

The main advantage of trading using opposite HENDERSON DIVIDEND and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HENDERSON DIVIDEND position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.
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The idea behind HENDERSON DIVIDEND INCOME and ProShares SP Kensho 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against ProShares as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. ProShares' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, ProShares' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to ProShares SP Kensho.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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