Correlation Between VanEck Digital and ProShares Trust

Can any of the company-specific risk be diversified away by investing in both VanEck Digital and ProShares Trust 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 VanEck Digital and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Digital Transformation and ProShares Trust, you can compare the effects of market volatilities on VanEck Digital and ProShares Trust 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 VanEck Digital with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Digital and ProShares Trust.

Diversification Opportunities for VanEck Digital and ProShares Trust

0.96

Correlation Coefficient

VanEck Digital  ProShares Trust

Almost no diversification

The 3 months correlation between VanEck and ProShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and VanEck Digital 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 VanEck Digital Transformation are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of VanEck Digital i.e., VanEck Digital and ProShares Trust go up and down completely randomly.

Pair Corralation between VanEck Digital and ProShares Trust

Given the investment horizon of 90 days VanEck Digital Transformation is expected to under-perform the ProShares Trust. In addition to that, VanEck Digital is 1.28 times more volatile than ProShares Trust. It trades about -0.12 of its total potential returns per unit of risk. ProShares Trust is currently generating about -0.14 per unit of volatility. If you would invest  7,606  in ProShares Trust on December 22, 2024 and sell it today you would lose (2,172) from holding ProShares Trust or give up 28.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

VanEck Digital Transformation  vs.  ProShares Trust

VanEck Digital Trans

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck Digital Transformation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

ProShares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with VanEck Digital and ProShares Trust

The main advantage of trading using opposite VanEck Digital and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Digital position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.

The idea behind VanEck Digital Transformation and ProShares Trust 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.