Correlation Between Vanguard FTSE and ProShares MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and ProShares MSCI 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 FTSE and ProShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Emerging and ProShares MSCI Emerging, you can compare the effects of market volatilities on Vanguard FTSE and ProShares MSCI 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 FTSE with a short position of ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and ProShares MSCI.
Diversification Opportunities for Vanguard FTSE and ProShares MSCI
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and ProShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and ProShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Emerging and Vanguard FTSE 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 FTSE Emerging are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Emerging has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and ProShares MSCI go up and down completely randomly.
Pair Corralation between Vanguard FTSE and ProShares MSCI
Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to generate 1.11 times more return on investment than ProShares MSCI. However, Vanguard FTSE is 1.11 times more volatile than ProShares MSCI Emerging. It trades about 0.0 of its potential returns per unit of risk. ProShares MSCI Emerging is currently generating about -0.06 per unit of risk. If you would invest 4,497 in Vanguard FTSE Emerging on November 4, 2024 and sell it today you would lose (15.00) from holding Vanguard FTSE Emerging or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. ProShares MSCI Emerging
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| ProShares MSCI Emerging |
Vanguard FTSE and ProShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and ProShares MSCI
The main advantage of trading using opposite Vanguard FTSE and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, ProShares MSCI 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 MSCI will offset losses from the drop in ProShares MSCI's long position.| Vanguard FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
| ProShares MSCI vs. ProShares MSCI EAFE | ProShares MSCI vs. ProShares MSCI Europe | ProShares MSCI vs. ProShares Russell 2000 | ProShares MSCI vs. ProShares SP MidCap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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