Correlation Between Vanguard Total and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total and ProShares 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 DJ Brookfield, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and ProShares.
Diversification Opportunities for Vanguard Total and ProShares
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and ProShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and ProShares DJ Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares DJ Brookfield 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares DJ Brookfield has no effect on the direction of Vanguard Total i.e., Vanguard Total and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Total and ProShares
Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 1.2 times more return on investment than ProShares. However, Vanguard Total is 1.2 times more volatile than ProShares DJ Brookfield. It trades about 0.22 of its potential returns per unit of risk. ProShares DJ Brookfield is currently generating about 0.17 per unit of risk. If you would invest 27,155 in Vanguard Total Stock on September 2, 2024 and sell it today you would earn a total of 2,831 from holding Vanguard Total Stock or generate 10.43% 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 DJ Brookfield
Performance |
| Timeline |
| Vanguard Total Stock |
| ProShares DJ Brookfield |
Vanguard Total and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and ProShares
The main advantage of trading using opposite Vanguard Total and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond |
| ProShares vs. FlexShares STOXX Global | ProShares vs. SPDR SP Global | ProShares vs. iShares Infrastructure ETF | ProShares vs. iShares Global Infrastructure |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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