Correlation Between Vanguard FTSE and ProShares Short

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Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE and ProShares Short 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 FTSE and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Emerging and ProShares Short SP500, you can compare the effects of market volatilities on Vanguard FTSE and ProShares Short 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 FTSE with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and ProShares Short.

Diversification Opportunities for Vanguard FTSE and ProShares Short

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Vanguard and ProShares is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and ProShares Short SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short SP500 and Vanguard FTSE 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 FTSE Emerging are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short SP500 has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and ProShares Short go up and down completely randomly.

Pair Corralation between Vanguard FTSE and ProShares Short

Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to generate 0.98 times more return on investment than ProShares Short. However, Vanguard FTSE Emerging is 1.02 times less risky than ProShares Short. It trades about 0.17 of its potential returns per unit of risk. ProShares Short SP500 is currently generating about -0.21 per unit of risk. If you would invest  4,089  in Vanguard FTSE Emerging on December 30, 2023 and sell it today you would earn a total of  88.00  from holding Vanguard FTSE Emerging or generate 2.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vanguard FTSE Emerging  vs.  ProShares Short SP500

 Performance 
       Timeline  
Vanguard FTSE Emerging 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Emerging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
ProShares Short SP500 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days ProShares Short SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Vanguard FTSE and ProShares Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard FTSE and ProShares Short

The main advantage of trading using opposite Vanguard FTSE and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.
The idea behind Vanguard FTSE Emerging and ProShares Short SP500 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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