Correlation Between Vanguard Large and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Vanguard Large and ProShares Short 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 Large and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Large Cap Index and ProShares Short SP500, you can compare the effects of market volatilities on Vanguard Large and ProShares Short 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 Large with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and ProShares Short.
Diversification Opportunities for Vanguard Large and ProShares Short
-0.99 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and ProShares is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Large Cap Index and ProShares Short SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short SP500 and Vanguard Large 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 Large Cap Index are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short SP500 has no effect on the direction of Vanguard Large i.e., Vanguard Large and ProShares Short go up and down completely randomly.
Pair Corralation between Vanguard Large and ProShares Short
Allowing for the 90-day total investment horizon Vanguard Large Cap Index is expected to generate 1.03 times more return on investment than ProShares Short. However, Vanguard Large is 1.03 times more volatile than ProShares Short SP500. It trades about 0.13 of its potential returns per unit of risk. ProShares Short SP500 is currently generating about -0.09 per unit of risk. If you would invest 22,254 in Vanguard Large Cap Index on August 29, 2024 and sell it today you would earn a total of 5,411 from holding Vanguard Large Cap Index or generate 24.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. ProShares Short SP500
Performance |
| Timeline |
| Vanguard Large Cap |
| ProShares Short SP500 |
Vanguard Large and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and ProShares Short
The main advantage of trading using opposite Vanguard Large and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.| Vanguard Large vs. Vanguard Mid Cap Index | Vanguard Large vs. Vanguard Small Cap Index | Vanguard Large vs. Vanguard Extended Market | Vanguard Large vs. Vanguard Small Cap Growth |
| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short Dow30 | ProShares Short vs. ProShares UltraShort SP500 | ProShares Short vs. ProShares Short Russell2000 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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