Correlation Between Vanguard Bond and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Bond and ProShares 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 Vanguard Bond and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Bond Index and ProShares Trust , you can compare the effects of market volatilities on Vanguard Bond and ProShares 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 Vanguard Bond with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Bond and ProShares Trust.
Diversification Opportunities for Vanguard Bond and ProShares Trust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and ProShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Bond Index and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Vanguard Bond 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 Vanguard Bond Index are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Vanguard Bond i.e., Vanguard Bond and ProShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Bond and ProShares Trust
Assuming the 90 days trading horizon Vanguard Bond is expected to generate 84.63 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Vanguard Bond Index is 6.61 times less risky than ProShares Trust. It trades about 0.02 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 151,000 in ProShares Trust on September 19, 2024 and sell it today you would earn a total of 46,774 from holding ProShares Trust or generate 30.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Vanguard Bond Index vs. ProShares Trust
Performance |
| Timeline |
| Vanguard Bond Index |
| ProShares Trust |
Vanguard Bond and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Bond and ProShares Trust
The main advantage of trading using opposite Vanguard Bond and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Bond position performs unexpectedly, ProShares 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.| Vanguard Bond vs. Vanguard Funds Public | Vanguard Bond vs. Vanguard Specialized Funds | Vanguard Bond vs. Vanguard World | Vanguard Bond vs. Vanguard Index Funds |
| ProShares Trust vs. Vanguard Index Funds | ProShares Trust vs. Vanguard Index Funds | ProShares Trust vs. SPDR SP 500 | ProShares Trust vs. Vanguard Bond Index |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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