Correlation Between Vanguard Industrials and Procure Space

Can any of the company-specific risk be diversified away by investing in both Vanguard Industrials 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 Industrials 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 Industrials Index and Procure Space ETF, you can compare the effects of market volatilities on Vanguard Industrials 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 Industrials with a short position of Procure Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Industrials and Procure Space.

Diversification Opportunities for Vanguard Industrials and Procure Space

0.84

Correlation Coefficient

Vanguard Industrials  Procure Space

Very poor diversification

The 3 months correlation between Vanguard and Procure is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Industrials Index 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 Industrials 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 Industrials Index 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 Industrials i.e., Vanguard Industrials and Procure Space go up and down completely randomly.

Pair Corralation between Vanguard Industrials and Procure Space

Considering the 90-day investment horizon Vanguard Industrials Index is expected to under-perform the Procure Space. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Industrials Index is 2.49 times less risky than Procure Space. The etf trades about -0.11 of its potential returns per unit of risk. The Procure Space ETF is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,141  in Procure Space ETF on September 18, 2024 and sell it today you would earn a total of  197.00  from holding Procure Space ETF or generate 9.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Vanguard Industrials Index  vs.  Procure Space ETF

Vanguard Industrials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Industrials Index are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Vanguard Industrials is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Procure Space ETF

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procure Space ETF are ranked lower than 18 (%) 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 Industrials and Procure Space

The main advantage of trading using opposite Vanguard Industrials and Procure Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Industrials 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 Industrials Index 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.