Correlation Between Vanguard Information and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Information and ProShares 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 Information and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Information Technology and ProShares SP Technology, you can compare the effects of market volatilities on Vanguard Information and ProShares 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 Information with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Information and ProShares.
Diversification Opportunities for Vanguard Information and ProShares
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology and Vanguard Information 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 Information Technology are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of Vanguard Information i.e., Vanguard Information and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Information and ProShares
Considering the 90-day investment horizon Vanguard Information Technology is expected to generate 1.16 times more return on investment than ProShares. However, Vanguard Information is 1.16 times more volatile than ProShares SP Technology. It trades about 0.11 of its potential returns per unit of risk. ProShares SP Technology is currently generating about 0.06 per unit of risk. If you would invest 60,196 in Vanguard Information Technology on August 26, 2024 and sell it today you would earn a total of 1,962 from holding Vanguard Information Technology or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Information Technolog vs. ProShares SP Technology
Performance |
| Timeline |
| Vanguard Information |
| ProShares SP Technology |
Vanguard Information and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Information and ProShares
The main advantage of trading using opposite Vanguard Information and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Information position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.| Vanguard Information vs. Vanguard Health Care | Vanguard Information vs. Vanguard Growth Index | Vanguard Information vs. Vanguard Consumer Discretionary | Vanguard Information vs. Vanguard Financials Index |
| ProShares vs. Invesco DWA Utilities | ProShares vs. Invesco Dynamic Large | ProShares vs. Invesco Dynamic Large | ProShares vs. HUMANA INC |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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