Correlation Between Vanguard Consumer and ProShares Online

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

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

Diversification Opportunities for Vanguard Consumer and ProShares Online

0.7

Correlation Coefficient

Vanguard Consumer  ProShares Online

Poor diversification

The 3 months correlation between Vanguard and ProShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Discretionar and ProShares Online Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Online Retail and Vanguard Consumer 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 Consumer Discretionary are associated (or correlated) with ProShares Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Online Retail has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and ProShares Online go up and down completely randomly.

Pair Corralation between Vanguard Consumer and ProShares Online

Considering the 90-day investment horizon Vanguard Consumer Discretionary is expected to under-perform the ProShares Online. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Consumer Discretionary is 1.15 times less risky than ProShares Online. The etf trades about -0.15 of its potential returns per unit of risk. The ProShares Online Retail is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,489  in ProShares Online Retail on December 29, 2024 and sell it today you would lose (113.00) from holding ProShares Online Retail or give up 2.52% of portfolio value over 90 days.

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

Vanguard Consumer Discretionar  vs.  ProShares Online Retail

Vanguard Consumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Consumer Discretionary has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

ProShares Online Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Online Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Consumer and ProShares Online

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

The idea behind Vanguard Consumer Discretionary and ProShares Online Retail 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.