Correlation Between Vanguard Real and ProShares

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

By analyzing existing cross correlation between Vanguard Real Estate and ProShares SP 500, you can compare the effects of market volatilities on Vanguard Real and ProShares 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 Real with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Real and ProShares.

Diversification Opportunities for Vanguard Real and ProShares

-0.22

Correlation Coefficient

Vanguard Real  ProShares

Very good diversification

The 3 months correlation between Vanguard and ProShares is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Real Estate and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and Vanguard Real 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 Real Estate are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Vanguard Real i.e., Vanguard Real and ProShares go up and down completely randomly.

Pair Corralation between Vanguard Real and ProShares

Considering the 90-day investment horizon Vanguard Real is expected to generate 4.02 times less return on investment than ProShares. In addition to that, Vanguard Real is 1.23 times more volatile than ProShares SP 500. It trades about 0.03 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about 0.17 per unit of volatility. If you would invest  6,399  in ProShares SP 500 on September 13, 2024 and sell it today you would earn a total of  139.75  from holding ProShares SP 500 or generate 2.18% return on investment over 90 days.

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

Vanguard Real Estate  vs.  ProShares SP 500

Vanguard Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Vanguard Real is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

ProShares SP 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Real and ProShares

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

The idea behind Vanguard Real Estate and ProShares SP 500 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.