Correlation Between ProShares UltraShort and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vanguard FTSE 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 FTSE 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 FTSE Developed, you can compare the effects of market volatilities on ProShares UltraShort and Vanguard FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vanguard FTSE.
Diversification Opportunities for ProShares UltraShort and Vanguard FTSE
-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 UltraShort 20 and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vanguard FTSE go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vanguard FTSE
Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 2.41 times more return on investment than Vanguard FTSE. However, ProShares UltraShort is 2.41 times more volatile than Vanguard FTSE Developed. It trades about 0.03 of its potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.06 per unit of risk. If you would invest 2,815 in ProShares UltraShort 20 on November 19, 2024 and sell it today you would earn a total of 710.00 from holding ProShares UltraShort 20 or generate 25.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort 20 vs. Vanguard FTSE Developed
Performance |
| Timeline |
| ProShares UltraShort |
| Vanguard FTSE Developed |
ProShares UltraShort and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vanguard FTSE
The main advantage of trading using opposite ProShares UltraShort and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE'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 FTSE vs. Vanguard FTSE Emerging | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Value Index | Vanguard FTSE vs. Vanguard Small Cap Value |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |