Correlation Between Vanguard Growth and ProShares Nasdaq

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

By analyzing existing cross correlation between Vanguard Growth Index and ProShares Nasdaq 100 Dorsey, you can compare the effects of market volatilities on Vanguard Growth and ProShares Nasdaq 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 Growth with a short position of ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Growth and ProShares Nasdaq.

Diversification Opportunities for Vanguard Growth and ProShares Nasdaq

0.86

Correlation Coefficient

Vanguard Growth  ProShares Nasdaq

Very poor diversification

The 3 months correlation between Vanguard and ProShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and ProShares Nasdaq 100 Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nasdaq 100 and Vanguard Growth 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 Growth Index are associated (or correlated) with ProShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nasdaq 100 has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and ProShares Nasdaq go up and down completely randomly.

Pair Corralation between Vanguard Growth and ProShares Nasdaq

Considering the 90-day investment horizon Vanguard Growth Index is expected to generate 0.78 times more return on investment than ProShares Nasdaq. However, Vanguard Growth Index is 1.28 times less risky than ProShares Nasdaq. It trades about 0.08 of its potential returns per unit of risk. ProShares Nasdaq 100 Dorsey is currently generating about 0.05 per unit of risk. If you would invest  26,841  in Vanguard Growth Index on February 13, 2025 and sell it today you would earn a total of  14,209  from holding Vanguard Growth Index or generate 52.94% return on investment over 90 days.

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

Vanguard Growth Index  vs.  ProShares Nasdaq 100 Dorsey

Vanguard Growth Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Growth Index has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vanguard Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ProShares Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Nasdaq 100 Dorsey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Vanguard Growth and ProShares Nasdaq

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

The idea behind Vanguard Growth Index and ProShares Nasdaq 100 Dorsey 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 Global Correlations module to find global opportunities by holding instruments from different markets.