Correlation Between ProShares Trust and Vanguard Total

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

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

Diversification Opportunities for ProShares Trust and Vanguard Total

-0.91

Correlation Coefficient

ProShares Trust  Vanguard Total

Pay attention - limited upside

The 3 months correlation between ProShares and Vanguard is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and ProShares Trust 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 ProShares Trust are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of ProShares Trust i.e., ProShares Trust and Vanguard Total go up and down completely randomly.

Pair Corralation between ProShares Trust and Vanguard Total

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Vanguard Total. In addition to that, ProShares Trust is 11.49 times more volatile than Vanguard Total Stock. It trades about -0.17 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.22 per unit of volatility. If you would invest  27,155  in Vanguard Total Stock on September 2, 2024 and sell it today you would earn a total of  2,831  from holding Vanguard Total Stock or generate 10.43% return on investment over 90 days.

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

ProShares Trust  vs.  Vanguard Total Stock

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Vanguard Total Stock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Trust and Vanguard Total

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

The idea behind ProShares Trust and Vanguard Total Stock 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.