Correlation Between ProShares and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both ProShares and Vanguard Total 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 and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares SP 500 and Vanguard Total Stock, you can compare the effects of market volatilities on ProShares and Vanguard Total 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 with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Vanguard Total.
Diversification Opportunities for ProShares and Vanguard Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ProShares and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP 500 and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and ProShares 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 SP 500 are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of ProShares i.e., ProShares and Vanguard Total go up and down completely randomly.
Pair Corralation between ProShares and Vanguard Total
Given the investment horizon of 90 days ProShares SP 500 is expected to generate 0.98 times more return on investment than Vanguard Total. However, ProShares SP 500 is 1.02 times less risky than Vanguard Total. It trades about 0.12 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.11 per unit of risk. If you would invest 4,120 in ProShares SP 500 on September 2, 2024 and sell it today you would earn a total of 2,368 from holding ProShares SP 500 or generate 57.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares SP 500 vs. Vanguard Total Stock
Performance |
| Timeline |
| ProShares SP 500 |
| Vanguard Total Stock |
ProShares and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares and Vanguard Total
The main advantage of trading using opposite ProShares and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares position performs unexpectedly, Vanguard Total 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 Total will offset losses from the drop in Vanguard Total's long position.| ProShares vs. Vanguard Total Stock | ProShares vs. SPDR SP 500 | ProShares vs. iShares Core SP | ProShares vs. Vanguard Dividend Appreciation |
| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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