Correlation Between Vanguard Value and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and ProShares UltraShort 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 Value and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and ProShares UltraShort Basic, you can compare the effects of market volatilities on Vanguard Value and ProShares UltraShort 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 Value with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and ProShares UltraShort.
Diversification Opportunities for Vanguard Value and ProShares UltraShort
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and ProShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and ProShares UltraShort Basic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Vanguard Value 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 Value Index are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Vanguard Value i.e., Vanguard Value and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Vanguard Value and ProShares UltraShort
Considering the 90-day investment horizon Vanguard Value Index is expected to generate 0.36 times more return on investment than ProShares UltraShort. However, Vanguard Value Index is 2.78 times less risky than ProShares UltraShort. It trades about 0.09 of its potential returns per unit of risk. ProShares UltraShort Basic is currently generating about -0.02 per unit of risk. If you would invest 13,806 in Vanguard Value Index on September 3, 2024 and sell it today you would earn a total of 4,381 from holding Vanguard Value Index or generate 31.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. ProShares UltraShort Basic
Performance |
| Timeline |
| Vanguard Value Index |
| ProShares UltraShort |
Vanguard Value and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and ProShares UltraShort
The main advantage of trading using opposite Vanguard Value and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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