Correlation Between ProShares Short and Vanguard Large
Can any of the company-specific risk be diversified away by investing in both ProShares Short and Vanguard Large 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 Short and Vanguard Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short SP500 and Vanguard Large Cap Index, you can compare the effects of market volatilities on ProShares Short and Vanguard Large 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 Short with a short position of Vanguard Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Vanguard Large.
Diversification Opportunities for ProShares Short and Vanguard Large
-0.99 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Vanguard is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short SP500 and Vanguard Large Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Large Cap and ProShares Short 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 Short SP500 are associated (or correlated) with Vanguard Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Large Cap has no effect on the direction of ProShares Short i.e., ProShares Short and Vanguard Large go up and down completely randomly.
Pair Corralation between ProShares Short and Vanguard Large
Allowing for the 90-day total investment horizon ProShares Short SP500 is expected to under-perform the Vanguard Large. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short SP500 is 1.03 times less risky than Vanguard Large. The etf trades about -0.09 of its potential returns per unit of risk. The Vanguard Large Cap Index is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 22,254 in Vanguard Large Cap Index on August 29, 2024 and sell it today you would earn a total of 5,411 from holding Vanguard Large Cap Index or generate 24.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short SP500 vs. Vanguard Large Cap Index
Performance |
| Timeline |
| ProShares Short SP500 |
| Vanguard Large Cap |
ProShares Short and Vanguard Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and Vanguard Large
The main advantage of trading using opposite ProShares Short and Vanguard Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, Vanguard Large 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 Large will offset losses from the drop in Vanguard Large's long position.| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares UltraShort SP500 | ProShares Short vs. ProShares Short Russell2000 |
| Vanguard Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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