Correlation Between Vanguard Growth and ProShares Ultra

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

Diversification Opportunities for Vanguard Growth and ProShares Ultra

-0.28

Correlation Coefficient

Vanguard Growth  ProShares Ultra

Very good diversification

The 3 months correlation between Vanguard and ProShares is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and ProShares Ultra MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra MSCI and Vanguard Growth 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 Growth 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 MSCI has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and ProShares Ultra go up and down completely randomly.

Pair Corralation between Vanguard Growth and ProShares Ultra

Considering the 90-day investment horizon Vanguard Growth Index is expected to under-perform the ProShares Ultra. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Growth Index is 2.1 times less risky than ProShares Ultra. The etf trades about -0.09 of its potential returns per unit of risk. The ProShares Ultra MSCI is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,385  in ProShares Ultra MSCI on December 29, 2024 and sell it today you would earn a total of  386.00  from holding ProShares Ultra MSCI or generate 27.87% return on investment over 90 days.

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

Vanguard Growth Index  vs.  ProShares Ultra MSCI

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

ProShares Ultra MSCI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra MSCI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, ProShares Ultra reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Growth and ProShares Ultra

The main advantage of trading using opposite Vanguard Growth and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Growth 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 Growth Index and ProShares Ultra MSCI 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.