Correlation Between ProShares Inflation and Vulcan Value

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

By analyzing existing cross correlation between ProShares Inflation Expectations and Vulcan Value Partners, you can compare the effects of market volatilities on ProShares Inflation and Vulcan Value 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 Inflation with a short position of Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Inflation and Vulcan Value.

Diversification Opportunities for ProShares Inflation and Vulcan Value

-0.56

Correlation Coefficient

ProShares Inflation  Vulcan Value

Excellent diversification

The 3 months correlation between ProShares and Vulcan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Inflation Expectatio and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners and ProShares Inflation 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 Inflation Expectations are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of ProShares Inflation i.e., ProShares Inflation and Vulcan Value go up and down completely randomly.

Pair Corralation between ProShares Inflation and Vulcan Value

Given the investment horizon of 90 days ProShares Inflation Expectations is expected to generate 0.54 times more return on investment than Vulcan Value. However, ProShares Inflation Expectations is 1.84 times less risky than Vulcan Value. It trades about 0.17 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about -0.07 per unit of risk. If you would invest  3,153  in ProShares Inflation Expectations on September 16, 2024 and sell it today you would earn a total of  170.00  from holding ProShares Inflation Expectations or generate 5.39% return on investment over 90 days.

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

ProShares Inflation Expectatio  vs.  Vulcan Value Partners

ProShares Inflation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Inflation Expectations are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ProShares Inflation is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vulcan Value Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vulcan Value Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Vulcan Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProShares Inflation and Vulcan Value

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

The idea behind ProShares Inflation Expectations and Vulcan Value Partners 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..