Correlation Between ProShares UltraShort and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vanguard Total 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 ProShares UltraShort and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Bloomberg and Vanguard Total Stock, you can compare the effects of market volatilities on ProShares UltraShort and Vanguard Total 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 ProShares UltraShort with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vanguard Total.
Diversification Opportunities for ProShares UltraShort and Vanguard Total
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and Vanguard is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and ProShares UltraShort 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 ProShares UltraShort Bloomberg are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vanguard Total go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vanguard Total
Given the investment horizon of 90 days ProShares UltraShort Bloomberg is expected to generate 20.31 times more return on investment than Vanguard Total. However, ProShares UltraShort is 20.31 times more volatile than Vanguard Total Stock. It trades about 0.1 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.08 per unit of risk. If you would invest 5,121 in ProShares UltraShort Bloomberg on January 26, 2024 and sell it today you would earn a total of 2,074 from holding ProShares UltraShort Bloomberg or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. Vanguard Total Stock
Performance |
| Timeline |
| ProShares UltraShort |
| Vanguard Total Stock |
ProShares UltraShort and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vanguard Total
The main advantage of trading using opposite ProShares UltraShort and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| ProShares UltraShort vs. ProShares Ultra Bloomberg | ProShares UltraShort vs. Direxion Daily Semiconductor | ProShares UltraShort vs. MicroSectors Big Oil | ProShares UltraShort vs. Direxion Daily SP |
| Vanguard Total vs. SPDR MSCI EAFE | Vanguard Total vs. SPDR MSCI Emerging | Vanguard Total vs. SPDR Russell 1000 | Vanguard Total vs. SPDR Russell 1000 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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