Correlation Between Vanguard Extended and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended 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 Extended and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and ProShares SP MidCap, you can compare the effects of market volatilities on Vanguard Extended 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 Extended with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and ProShares.
Diversification Opportunities for Vanguard Extended and ProShares
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and ProShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap and Vanguard Extended 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 Extended Market 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 MidCap has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Extended and ProShares
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.13 times more return on investment than ProShares. However, Vanguard Extended is 1.13 times more volatile than ProShares SP MidCap. It trades about 0.3 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.21 per unit of risk. If you would invest 18,330 in Vanguard Extended Market on August 24, 2024 and sell it today you would earn a total of 1,670 from holding Vanguard Extended Market or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. ProShares SP MidCap
Performance |
| Timeline |
| Vanguard Extended Market |
| ProShares SP MidCap |
Vanguard Extended and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and ProShares
The main advantage of trading using opposite Vanguard Extended and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended 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 Extended vs. Vanguard Large Cap Index | Vanguard Extended vs. Vanguard Small Cap Growth | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Growth |
| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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