Correlation Between Vanguard Information and ProShares Metaverse

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

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

Diversification Opportunities for Vanguard Information and ProShares Metaverse

0.91

Correlation Coefficient

Vanguard Information  ProShares Metaverse

Almost no diversification

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

Pair Corralation between Vanguard Information and ProShares Metaverse

Considering the 90-day investment horizon Vanguard Information is expected to generate 1.05 times less return on investment than ProShares Metaverse. In addition to that, Vanguard Information is 1.05 times more volatile than ProShares Metaverse ETF. It trades about 0.17 of its total potential returns per unit of risk. ProShares Metaverse ETF is currently generating about 0.19 per unit of volatility. If you would invest  4,121  in ProShares Metaverse ETF on September 3, 2024 and sell it today you would earn a total of  592.00  from holding ProShares Metaverse ETF or generate 14.37% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  ProShares Metaverse ETF

Vanguard Information

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Vanguard Information unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares Metaverse ETF

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Metaverse ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ProShares Metaverse unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Information and ProShares Metaverse

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

The idea behind Vanguard Information Technology and ProShares Metaverse 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.