Correlation Between Vanguard Total and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and ProShares Trust 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 Total and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and ProShares Trust, you can compare the effects of market volatilities on Vanguard Total and ProShares Trust 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 Total with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and ProShares Trust.
Diversification Opportunities for Vanguard Total and ProShares Trust
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and ProShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Vanguard Total 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 Total Stock are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Vanguard Total i.e., Vanguard Total and ProShares Trust go up and down completely randomly.
Pair Corralation between Vanguard Total and ProShares Trust
Considering the 90-day investment horizon Vanguard Total is expected to generate 17.44 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Vanguard Total Stock is 11.18 times less risky than ProShares Trust. It trades about 0.2 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,315 in ProShares Trust on August 26, 2024 and sell it today you would earn a total of 1,009 from holding ProShares Trust or generate 76.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. ProShares Trust
Performance |
| Timeline |
| Vanguard Total Stock |
| ProShares Trust |
Vanguard Total and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and ProShares Trust
The main advantage of trading using opposite Vanguard Total and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
| ProShares Trust vs. ProShares Trust | ProShares Trust vs. iShares Ethereum Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. Grayscale Ethereum Trust |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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