Correlation Between ProShares Ultra and Vanguard International

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

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

Diversification Opportunities for ProShares Ultra and Vanguard International

-0.4

Correlation Coefficient

ProShares Ultra  Vanguard International

Very good diversification

The 3 months correlation between ProShares and Vanguard is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International and ProShares Ultra 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 Ultra QQQ are associated (or correlated) with Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Vanguard International go up and down completely randomly.

Pair Corralation between ProShares Ultra and Vanguard International

Considering the 90-day investment horizon ProShares Ultra QQQ is expected to under-perform the Vanguard International. In addition to that, ProShares Ultra is 3.4 times more volatile than Vanguard International Dividend. It trades about -0.11 of its total potential returns per unit of risk. Vanguard International Dividend is currently generating about 0.1 per unit of volatility. If you would invest  7,953  in Vanguard International Dividend on December 30, 2024 and sell it today you would earn a total of  373.00  from holding Vanguard International Dividend or generate 4.69% return on investment over 90 days.

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

ProShares Ultra QQQ  vs.  Vanguard International Dividen

ProShares Ultra QQQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra QQQ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's essential 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.

Vanguard International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard International Dividend are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Vanguard International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProShares Ultra and Vanguard International

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

The idea behind ProShares Ultra QQQ and Vanguard International Dividend 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.