Correlation Between Vanguard Mid and ProShares Ultra

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

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

Diversification Opportunities for Vanguard Mid and ProShares Ultra

0.38

Correlation Coefficient

Vanguard Mid  ProShares Ultra

Weak diversification

The 3 months correlation between Vanguard and ProShares is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and ProShares Ultra Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Silver and Vanguard Mid 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 Mid Cap Index are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Silver has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and ProShares Ultra go up and down completely randomly.

Pair Corralation between Vanguard Mid and ProShares Ultra

Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Mid Cap Index is 2.78 times less risky than ProShares Ultra. The etf trades about -0.26 of its potential returns per unit of risk. The ProShares Ultra Silver is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,058  in ProShares Ultra Silver on December 9, 2024 and sell it today you would earn a total of  148.00  from holding ProShares Ultra Silver or generate 3.65% return on investment over 90 days.

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

Vanguard Mid Cap Index  vs.  ProShares Ultra Silver

Vanguard Mid Cap

Risk-Adjusted Performance

Very Weak

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

ProShares Ultra Silver

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra Silver are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ProShares Ultra is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vanguard Mid and ProShares Ultra

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

The idea behind Vanguard Mid Cap Index and ProShares Ultra Silver 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.