Correlation Between ProShares Ultra and Vanguard Quality

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

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

Diversification Opportunities for ProShares Ultra and Vanguard Quality

-0.68

Correlation Coefficient

ProShares Ultra  Vanguard Quality

Excellent diversification

The 3 months correlation between ProShares and Vanguard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Yen and Vanguard Quality Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Quality Factor and ProShares Ultra 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 Ultra Yen are associated (or correlated) with Vanguard Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Quality Factor has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Vanguard Quality go up and down completely randomly.

Pair Corralation between ProShares Ultra and Vanguard Quality

Considering the 90-day investment horizon ProShares Ultra Yen is expected to under-perform the Vanguard Quality. In addition to that, ProShares Ultra is 1.81 times more volatile than Vanguard Quality Factor. It trades about -0.07 of its total potential returns per unit of risk. Vanguard Quality Factor is currently generating about 0.15 per unit of volatility. If you would invest  13,809  in Vanguard Quality Factor on September 3, 2024 and sell it today you would earn a total of  1,171  from holding Vanguard Quality Factor or generate 8.48% return on investment over 90 days.

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

ProShares Ultra Yen  vs.  Vanguard Quality Factor

ProShares Ultra Yen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Ultra Yen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Vanguard Quality Factor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Quality Factor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vanguard Quality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares Ultra and Vanguard Quality

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

The idea behind ProShares Ultra Yen and Vanguard Quality Factor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.