Correlation Between Vanguard Total and ProShares Russell
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and ProShares Russell 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 Total and ProShares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and ProShares Russell 2000, you can compare the effects of market volatilities on Vanguard Total and ProShares Russell 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 Total with a short position of ProShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and ProShares Russell.
Diversification Opportunities for Vanguard Total and ProShares Russell
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and ProShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and ProShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Russell 2000 and Vanguard Total 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 Total Bond are associated (or correlated) with ProShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Russell 2000 has no effect on the direction of Vanguard Total i.e., Vanguard Total and ProShares Russell go up and down completely randomly.
Pair Corralation between Vanguard Total and ProShares Russell
Considering the 90-day investment horizon Vanguard Total is expected to generate 4.26 times less return on investment than ProShares Russell. But when comparing it to its historical volatility, Vanguard Total Bond is 3.19 times less risky than ProShares Russell. It trades about 0.04 of its potential returns per unit of risk. ProShares Russell 2000 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,859 in ProShares Russell 2000 on August 31, 2024 and sell it today you would earn a total of 1,630 from holding ProShares Russell 2000 or generate 27.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vanguard Total Bond vs. ProShares Russell 2000
Performance |
| Timeline |
| Vanguard Total Bond |
| ProShares Russell 2000 |
Vanguard Total and ProShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and ProShares Russell
The main advantage of trading using opposite Vanguard Total and ProShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, ProShares Russell 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 Russell will offset losses from the drop in ProShares Russell's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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