Correlation Between Vale SA and ProShares Large
Can any of the company-specific risk be diversified away by investing in both Vale SA 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 Vale SA and ProShares Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA ADR and ProShares Large Cap, you can compare the effects of market volatilities on Vale SA 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 Vale SA with a short position of ProShares Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and ProShares Large.
Diversification Opportunities for Vale SA and ProShares Large
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vale and ProShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR 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 Vale SA 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 Vale SA ADR 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 Vale SA i.e., Vale SA and ProShares Large go up and down completely randomly.
Pair Corralation between Vale SA and ProShares Large
Given the investment horizon of 90 days Vale SA is expected to generate 2.74 times less return on investment than ProShares Large. In addition to that, Vale SA is 2.26 times more volatile than ProShares Large Cap. It trades about 0.04 of its total potential returns per unit of risk. ProShares Large Cap is currently generating about 0.27 per unit of volatility. If you would invest 6,308 in ProShares Large Cap on April 29, 2025 and sell it today you would earn a total of 917.00 from holding ProShares Large Cap or generate 14.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Vale SA ADR vs. ProShares Large Cap
Performance |
| Timeline |
| Vale SA ADR |
| ProShares Large Cap |
Vale SA and ProShares Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and ProShares Large
The main advantage of trading using opposite Vale SA and ProShares Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA 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.| Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
| ProShares Large vs. ProShares Hedge Replication | ProShares Large vs. ProShares Ultra Consumer | ProShares Large vs. ProShares Ultra Consumer | ProShares Large vs. IQ Hedge Multi Strategy |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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