Correlation Between Vanguard Russell and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Russell 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 Russell and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Russell 2000 and ProShares SP 500, you can compare the effects of market volatilities on Vanguard Russell 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 Russell with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and ProShares.
Diversification Opportunities for Vanguard Russell and ProShares
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and ProShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 2000 and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and Vanguard Russell 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 Russell 2000 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 500 has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Russell and ProShares
Given the investment horizon of 90 days Vanguard Russell 2000 is expected to generate 2.66 times more return on investment than ProShares. However, Vanguard Russell is 2.66 times more volatile than ProShares SP 500. It trades about 0.18 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.11 per unit of risk. If you would invest 14,753 in Vanguard Russell 2000 on August 27, 2024 and sell it today you would earn a total of 971.00 from holding Vanguard Russell 2000 or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Russell 2000 vs. ProShares SP 500
Performance |
| Timeline |
| Vanguard Russell 2000 |
| ProShares SP 500 |
Vanguard Russell and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Russell and ProShares
The main advantage of trading using opposite Vanguard Russell and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Russell 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.The idea behind Vanguard Russell 2000 and ProShares SP 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ProShares vs. BlackRock ETF Trust | ProShares vs. Rbb Fund | ProShares vs. Virtus ETF Trust | ProShares vs. Amplify CWP Enhanced |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |