Correlation Between Vanguard Consumer and ProShares Smart
Can any of the company-specific risk be diversified away by investing in both Vanguard Consumer and ProShares Smart 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 Vanguard Consumer and ProShares Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Consumer Discretionary and ProShares Smart Materials, you can compare the effects of market volatilities on Vanguard Consumer and ProShares Smart 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 Vanguard Consumer with a short position of ProShares Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Consumer and ProShares Smart.
Diversification Opportunities for Vanguard Consumer and ProShares Smart
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and ProShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar and ProShares Smart Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Smart Materials and Vanguard Consumer 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 Vanguard Consumer Discretionary are associated (or correlated) with ProShares Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Smart Materials has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and ProShares Smart go up and down completely randomly.
Pair Corralation between Vanguard Consumer and ProShares Smart
Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to generate 1.18 times more return on investment than ProShares Smart. However, Vanguard Consumer is 1.18 times more volatile than ProShares Smart Materials. It trades about 0.35 of its potential returns per unit of risk. ProShares Smart Materials is currently generating about -0.17 per unit of risk. If you would invest 37,007 in Vanguard Consumer Discretionary on September 12, 2024 and sell it today you would earn a total of 2,722 from holding Vanguard Consumer Discretionary or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Consumer Discretionar vs. ProShares Smart Materials
Performance |
| Timeline |
| Vanguard Consumer |
| ProShares Smart Materials |
Vanguard Consumer and ProShares Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Consumer and ProShares Smart
The main advantage of trading using opposite Vanguard Consumer and ProShares Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Consumer position performs unexpectedly, ProShares Smart 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 ProShares Smart will offset losses from the drop in ProShares Smart's long position.| Vanguard Consumer vs. Vanguard Consumer Staples | Vanguard Consumer vs. Vanguard Industrials Index | Vanguard Consumer vs. Vanguard Communication Services | Vanguard Consumer vs. Vanguard Materials Index |
| ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Invesco SP 500 | ProShares Smart vs. Aquagold International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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