Correlation Between ProShares Ultra and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Vanguard Intermediate 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 Ultra and Vanguard Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra Semiconductors and Vanguard Intermediate Term Bond, you can compare the effects of market volatilities on ProShares Ultra and Vanguard Intermediate 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 Ultra with a short position of Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Vanguard Intermediate.
Diversification Opportunities for ProShares Ultra and Vanguard Intermediate
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Vanguard is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Semiconductors and Vanguard Intermediate Term Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate and ProShares Ultra 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 Ultra Semiconductors are associated (or correlated) with Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between ProShares Ultra and Vanguard Intermediate
Considering the 90-day investment horizon ProShares Ultra Semiconductors is expected to generate 12.13 times more return on investment than Vanguard Intermediate. However, ProShares Ultra is 12.13 times more volatile than Vanguard Intermediate Term Bond. It trades about 0.05 of its potential returns per unit of risk. Vanguard Intermediate Term Bond is currently generating about 0.1 per unit of risk. If you would invest 6,436 in ProShares Ultra Semiconductors on September 18, 2024 and sell it today you would earn a total of 151.00 from holding ProShares Ultra Semiconductors or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra Semiconductors vs. Vanguard Intermediate Term Bon
Performance |
| Timeline |
| ProShares Ultra Semi |
| Vanguard Intermediate |
ProShares Ultra and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Vanguard Intermediate
The main advantage of trading using opposite ProShares Ultra and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Vanguard Intermediate 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 Intermediate will offset losses from the drop in Vanguard Intermediate's long position.The idea behind ProShares Ultra Semiconductors and Vanguard Intermediate Term Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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