Correlation Between Vanguard Consumer and Procure Space

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

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

Diversification Opportunities for Vanguard Consumer and Procure Space

0.18

Correlation Coefficient

Vanguard Consumer  Procure Space

Average diversification

The 3 months correlation between Vanguard and Procure is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Consumer Staples and Procure Space ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procure Space ETF 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 Staples are associated (or correlated) with Procure Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procure Space ETF has no effect on the direction of Vanguard Consumer i.e., Vanguard Consumer and Procure Space go up and down completely randomly.

Pair Corralation between Vanguard Consumer and Procure Space

Considering the 90-day investment horizon Vanguard Consumer is expected to generate 1.24 times less return on investment than Procure Space. But when comparing it to its historical volatility, Vanguard Consumer Staples is 2.49 times less risky than Procure Space. It trades about 0.05 of its potential returns per unit of risk. Procure Space ETF is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,994  in Procure Space ETF on October 20, 2024 and sell it today you would earn a total of  299.00  from holding Procure Space ETF or generate 14.99% return on investment over 90 days.

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

Vanguard Consumer Staples  vs.  Procure Space ETF

Vanguard Consumer Staples

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Consumer Staples has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Vanguard Consumer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Procure Space ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 12 (%) 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.

Pair Trading with Vanguard Consumer and Procure Space

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

The idea behind Vanguard Consumer Staples and Procure Space ETF 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 Global Correlations module to find global opportunities by holding instruments from different markets.