Correlation Between Virtus Newfleet and ProShares Large

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

By analyzing existing cross correlation between Virtus Newfleet ABSMBS and ProShares Large Cap, you can compare the effects of market volatilities on Virtus Newfleet and ProShares Large 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 Virtus Newfleet with a short position of ProShares Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Newfleet and ProShares Large.

Diversification Opportunities for Virtus Newfleet and ProShares Large

0.7

Correlation Coefficient

Virtus Newfleet  ProShares Large

Poor diversification

The 3 months correlation between Virtus and ProShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Newfleet ABSMBS and ProShares Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Large Cap and Virtus Newfleet 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 Virtus Newfleet ABSMBS are associated (or correlated) with ProShares Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Large Cap has no effect on the direction of Virtus Newfleet i.e., Virtus Newfleet and ProShares Large go up and down completely randomly.

Pair Corralation between Virtus Newfleet and ProShares Large

Given the investment horizon of 90 days Virtus Newfleet is expected to generate 9.74 times less return on investment than ProShares Large. But when comparing it to its historical volatility, Virtus Newfleet ABSMBS is 5.74 times less risky than ProShares Large. It trades about 0.18 of its potential returns per unit of risk. ProShares Large Cap is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  6,082  in ProShares Large Cap on April 23, 2025 and sell it today you would earn a total of  1,049  from holding ProShares Large Cap or generate 17.25% return on investment over 90 days.

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

Virtus Newfleet ABSMBS  vs.  ProShares Large Cap

Virtus Newfleet ABSMBS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Newfleet ABSMBS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Virtus Newfleet is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ProShares Large Cap

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Large Cap are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, ProShares Large displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Newfleet and ProShares Large

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

The idea behind Virtus Newfleet ABSMBS and ProShares Large Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.