Correlation Between ProShares UltraShort and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vanguard Small 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 UltraShort and Vanguard Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort 20 and Vanguard Small Cap Index, you can compare the effects of market volatilities on ProShares UltraShort and Vanguard Small 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 UltraShort with a short position of Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vanguard Small.
Diversification Opportunities for ProShares UltraShort and Vanguard Small
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Vanguard is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap and ProShares UltraShort 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 UltraShort 20 are associated (or correlated) with Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vanguard Small go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vanguard Small
Considering the 90-day investment horizon ProShares UltraShort is expected to generate 1.19 times less return on investment than Vanguard Small. In addition to that, ProShares UltraShort is 1.57 times more volatile than Vanguard Small Cap Index. It trades about 0.06 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.11 per unit of volatility. If you would invest 23,536 in Vanguard Small Cap Index on November 1, 2024 and sell it today you would earn a total of 1,670 from holding Vanguard Small Cap Index or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Vanguard Small Cap Index
Performance |
| Timeline |
| ProShares UltraShort |
| Vanguard Small Cap |
ProShares UltraShort and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vanguard Small
The main advantage of trading using opposite ProShares UltraShort and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vanguard Small 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 Small will offset losses from the drop in Vanguard Small's long position.| ProShares UltraShort vs. ProShares UltraShort 7 10 | ProShares UltraShort vs. ProShares UltraShort SP500 | ProShares UltraShort vs. iShares 20 Year | ProShares UltraShort vs. Direxion Daily 20 |
| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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