Correlation Between Procure Space and Vanguard Materials

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

By analyzing existing cross correlation between Procure Space ETF and Vanguard Materials Index, you can compare the effects of market volatilities on Procure Space and Vanguard Materials 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 Procure Space with a short position of Vanguard Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procure Space and Vanguard Materials.

Diversification Opportunities for Procure Space and Vanguard Materials

-0.51

Correlation Coefficient

Procure Space  Vanguard Materials

Excellent diversification

The 3 months correlation between Procure and Vanguard is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Procure Space ETF and Vanguard Materials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Materials Index and Procure Space 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 Procure Space ETF are associated (or correlated) with Vanguard Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Materials Index has no effect on the direction of Procure Space i.e., Procure Space and Vanguard Materials go up and down completely randomly.

Pair Corralation between Procure Space and Vanguard Materials

Considering the 90-day investment horizon Procure Space ETF is expected to generate 1.58 times more return on investment than Vanguard Materials. However, Procure Space is 1.58 times more volatile than Vanguard Materials Index. It trades about 0.02 of its potential returns per unit of risk. Vanguard Materials Index is currently generating about 0.02 per unit of risk. If you would invest  2,036  in Procure Space ETF on October 5, 2024 and sell it today you would earn a total of  286.00  from holding Procure Space ETF or generate 14.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Procure Space ETF  vs.  Vanguard Materials Index

Procure Space ETF

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Procure Space displayed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Materials Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Materials Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Procure Space and Vanguard Materials

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

The idea behind Procure Space ETF and Vanguard Materials Index 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.