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 K 1 Free, 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
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and ProShares is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and ProShares K 1 Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares K 1 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 K 1 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
Assuming the 90 days horizon Vanguard Extended Market is expected to under-perform the ProShares. In addition to that, Vanguard Extended is 1.26 times more volatile than ProShares K 1 Free. It trades about -0.15 of its total potential returns per unit of risk. ProShares K 1 Free is currently generating about 0.12 per unit of volatility. If you would invest 4,746 in ProShares K 1 Free on January 25, 2024 and sell it today you would earn a total of 96.00 from holding ProShares K 1 Free or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. ProShares K 1 Free
Performance |
| Timeline |
| Vanguard Extended Market |
| ProShares K 1 |
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 Materials Index | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Limited Term Tax Exempt | Vanguard Extended vs. Vanguard Global Minimum |
| ProShares vs. United States 12 | ProShares vs. Credit Suisse X Links | ProShares vs. Invesco DB Oil | ProShares vs. United States 12 |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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