Correlation Between Vanguard and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Mid Cap and ProShares SP MidCap, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and ProShares.
Diversification Opportunities for Vanguard and ProShares
Almost no diversification
The 3 months correlation between Vanguard and ProShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap and Vanguard 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 SP Mid Cap 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 MidCap has no effect on the direction of Vanguard i.e., Vanguard and ProShares go up and down completely randomly.
Pair Corralation between Vanguard and ProShares
Given the investment horizon of 90 days Vanguard SP Mid Cap is expected to generate 0.98 times more return on investment than ProShares. However, Vanguard SP Mid Cap is 1.02 times less risky than ProShares. It trades about 0.21 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.21 per unit of risk. If you would invest 10,559 in Vanguard SP Mid Cap on August 24, 2024 and sell it today you would earn a total of 579.00 from holding Vanguard SP Mid Cap or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP Mid Cap vs. ProShares SP MidCap
Performance |
| Timeline |
| Vanguard SP Mid |
| ProShares SP MidCap |
Vanguard and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and ProShares
The main advantage of trading using opposite Vanguard and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard SP Small Cap |
| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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