Correlation Between Vanguard FTSE and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and ProShares Short 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 FTSE and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Developed and ProShares Short 20, you can compare the effects of market volatilities on Vanguard FTSE and ProShares Short 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 FTSE with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and ProShares Short.
Diversification Opportunities for Vanguard FTSE and ProShares Short
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and ProShares is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed and ProShares Short 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short 20 and Vanguard FTSE 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 FTSE Developed are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short 20 has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and ProShares Short go up and down completely randomly.
Pair Corralation between Vanguard FTSE and ProShares Short
Considering the 90-day investment horizon Vanguard FTSE Developed is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Developed is 1.47 times less risky than ProShares Short. The etf trades about -0.14 of its potential returns per unit of risk. The ProShares Short 20 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,366 in ProShares Short 20 on August 28, 2024 and sell it today you would lose (18.00) from holding ProShares Short 20 or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. ProShares Short 20
Performance |
| Timeline |
| Vanguard FTSE Developed |
| ProShares Short 20 |
Vanguard FTSE and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and ProShares Short
The main advantage of trading using opposite Vanguard FTSE and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.| 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 |
| ProShares Short vs. ProShares Short 7 10 | ProShares Short vs. Direxion Daily 20 | ProShares Short vs. ProShares UltraShort 7 10 | ProShares Short vs. ProShares UltraShort 20 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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