Correlation Between ProShares UltraShort and Vanguard Real

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

By analyzing existing cross correlation between ProShares UltraShort 20 and Vanguard Real Estate, you can compare the effects of market volatilities on ProShares UltraShort and Vanguard Real 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 UltraShort with a short position of Vanguard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Vanguard Real.

Diversification Opportunities for ProShares UltraShort and Vanguard Real

-0.79

Correlation Coefficient

ProShares UltraShort  Vanguard Real

Pay attention - limited upside

The 3 months correlation between ProShares and Vanguard is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort 20 and Vanguard Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Real Estate and ProShares UltraShort 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 UltraShort 20 are associated (or correlated) with Vanguard Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Real Estate has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Vanguard Real go up and down completely randomly.

Pair Corralation between ProShares UltraShort and Vanguard Real

Considering the 90-day investment horizon ProShares UltraShort 20 is expected to generate 1.73 times more return on investment than Vanguard Real. However, ProShares UltraShort is 1.73 times more volatile than Vanguard Real Estate. It trades about 0.05 of its potential returns per unit of risk. Vanguard Real Estate is currently generating about 0.03 per unit of risk. If you would invest  3,135  in ProShares UltraShort 20 on October 9, 2024 and sell it today you would earn a total of  579.00  from holding ProShares UltraShort 20 or generate 18.47% return on investment over 90 days.

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

ProShares UltraShort 20  vs.  Vanguard Real Estate

ProShares UltraShort

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort 20 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, ProShares UltraShort unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with ProShares UltraShort and Vanguard Real

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

The idea behind ProShares UltraShort 20 and Vanguard Real Estate 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.