Correlation Between Vanguard Small and Proshares

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

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

Diversification Opportunities for Vanguard Small and Proshares

-0.31

Correlation Coefficient

Vanguard Small  Proshares

Very good diversification

The 3 months correlation between Vanguard and Proshares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth and Proshares SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proshares SP Global and Vanguard Small 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 Vanguard Small Cap Growth are associated (or correlated) with Proshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proshares SP Global has no effect on the direction of Vanguard Small i.e., Vanguard Small and Proshares go up and down completely randomly.

Pair Corralation between Vanguard Small and Proshares

Considering the 90-day investment horizon Vanguard Small Cap Growth is expected to under-perform the Proshares. In addition to that, Vanguard Small is 1.04 times more volatile than Proshares SP Global. It trades about -0.11 of its total potential returns per unit of risk. Proshares SP Global is currently generating about 0.08 per unit of volatility. If you would invest  2,571  in Proshares SP Global on December 21, 2024 and sell it today you would earn a total of  153.00  from holding Proshares SP Global or generate 5.95% return on investment over 90 days.

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

Vanguard Small Cap Growth  vs.  Proshares SP Global

Vanguard Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Small Cap Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Proshares SP Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Proshares SP Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Proshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vanguard Small and Proshares

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

The idea behind Vanguard Small Cap Growth and Proshares SP Global 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.