Correlation Between Vanguard Large and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Large 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 Large and ProShares 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 SP 500, you can compare the effects of market volatilities on Vanguard Large 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 Large with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Large and ProShares.
Diversification Opportunities for Vanguard Large and ProShares
0.99 | Correlation Coefficient |
No risk reduction
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 SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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. 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 Large i.e., Vanguard Large and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Large and ProShares
Allowing for the 90-day total investment horizon Vanguard Large Cap Index is expected to generate 1.0 times more return on investment than ProShares. However, Vanguard Large Cap Index is 1.0 times less risky than ProShares. It trades about 0.13 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.12 per unit of risk. If you would invest 17,211 in Vanguard Large Cap Index on August 28, 2024 and sell it today you would earn a total of 10,306 from holding Vanguard Large Cap Index or generate 59.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Large Cap Index vs. ProShares SP 500
Performance |
| Timeline |
| Vanguard Large Cap |
| ProShares SP 500 |
Vanguard Large and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Large and ProShares
The main advantage of trading using opposite Vanguard Large and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Large 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 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 vs. Morningstar Unconstrained Allocation | ProShares vs. High Yield Municipal Fund | ProShares vs. Via Renewables | ProShares vs. Knife River |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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