Correlation Between ProShares and Vanguard Information

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

By analyzing existing cross correlation between ProShares SP Kensho and Vanguard Information Technology, you can compare the effects of market volatilities on ProShares and Vanguard Information 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 with a short position of Vanguard Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares and Vanguard Information.

Diversification Opportunities for ProShares and Vanguard Information

0.91

Correlation Coefficient

ProShares  Vanguard Information

Almost no diversification

The 3 months correlation between ProShares and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares SP Kensho and Vanguard Information Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Information and ProShares 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 SP Kensho are associated (or correlated) with Vanguard Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Information has no effect on the direction of ProShares i.e., ProShares and Vanguard Information go up and down completely randomly.

Pair Corralation between ProShares and Vanguard Information

Given the investment horizon of 90 days ProShares SP Kensho is expected to generate 1.16 times more return on investment than Vanguard Information. However, ProShares is 1.16 times more volatile than Vanguard Information Technology. It trades about 0.21 of its potential returns per unit of risk. Vanguard Information Technology is currently generating about 0.19 per unit of risk. If you would invest  3,523  in ProShares SP Kensho on September 4, 2024 and sell it today you would earn a total of  701.00  from holding ProShares SP Kensho or generate 19.9% return on investment over 90 days.

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

ProShares SP Kensho  vs.  Vanguard Information Technolog

ProShares SP Kensho

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP Kensho are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking signals, ProShares showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Vanguard Information unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProShares and Vanguard Information

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

The idea behind ProShares SP Kensho and Vanguard Information Technology 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.