Correlation Between Proshares Russell and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and Vanguard Intermediate 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 Russell and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and Vanguard Intermediate Term Tax Exempt, you can compare the effects of market volatilities on Proshares Russell and Vanguard Intermediate 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 Russell with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Vanguard Intermediate.
Diversification Opportunities for Proshares Russell and Vanguard Intermediate
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Proshares and Vanguard is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Vanguard Intermediate Term Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and Proshares Russell 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 Russell 2000 are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Proshares Russell i.e., Proshares Russell and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between Proshares Russell and Vanguard Intermediate
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 4.27 times more return on investment than Vanguard Intermediate. However, Proshares Russell is 4.27 times more volatile than Vanguard Intermediate Term Tax Exempt. It trades about 0.19 of its potential returns per unit of risk. Vanguard Intermediate Term Tax Exempt is currently generating about 0.13 per unit of risk. If you would invest 4,175 in Proshares Russell 2000 on August 29, 2024 and sell it today you would earn a total of 219.00 from holding Proshares Russell 2000 or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proshares Russell 2000 vs. Vanguard Intermediate Term Tax
Performance |
| Timeline |
| Proshares Russell 2000 |
| Vanguard Intermediate |
Proshares Russell and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and Vanguard Intermediate
The main advantage of trading using opposite Proshares Russell and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, Vanguard Intermediate 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 Vanguard Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| Proshares Russell vs. Global X SP | Proshares Russell vs. Amplify CWP Enhanced | Proshares Russell vs. Global X Russell | Proshares Russell vs. JPMorgan Nasdaq Equity |
| Vanguard Intermediate vs. Xtrackers California Municipal | Vanguard Intermediate vs. IQ MacKay Municipal | Vanguard Intermediate vs. IQ MacKay Municipal | Vanguard Intermediate vs. ALPS Intermediate Municipal |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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