Correlation Between ProShares UltraShort and Vanguard FTSE
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Vanguard FTSE 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 FTSE 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 FTSE Developed, you can compare the effects of market volatilities on ProShares UltraShort and Vanguard FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vanguard FTSE.
Diversification Opportunities for ProShares UltraShort and Vanguard FTSE
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Vanguard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Bloomberg and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vanguard FTSE go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Vanguard FTSE
Considering the 90-day investment horizon ProShares UltraShort Bloomberg is expected to under-perform the Vanguard FTSE. In addition to that, ProShares UltraShort is 2.15 times more volatile than Vanguard FTSE Developed. It trades about -0.1 of its total potential returns per unit of risk. Vanguard FTSE Developed is currently generating about -0.12 per unit of volatility. If you would invest 4,987 in Vanguard FTSE Developed on January 25, 2024 and sell it today you would lose (100.00) from holding Vanguard FTSE Developed or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraShort Bloomberg vs. Vanguard FTSE Developed
Performance |
| Timeline |
| ProShares UltraShort |
| Vanguard FTSE Developed |
ProShares UltraShort and Vanguard FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Vanguard FTSE
The main advantage of trading using opposite ProShares UltraShort and Vanguard FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Vanguard FTSE 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 FTSE will offset losses from the drop in Vanguard FTSE's long position.The idea behind ProShares UltraShort Bloomberg and Vanguard FTSE Developed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vanguard FTSE vs. iShares ESG Aware | Vanguard FTSE vs. iShares ESG Aware | Vanguard FTSE vs. iShares ESG Aware | Vanguard FTSE vs. iShares MSCI USA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |