Correlation Between Volatility Shares and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and ProShares UltraShort 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 Volatility Shares and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and ProShares UltraShort SmallCap600, you can compare the effects of market volatilities on Volatility Shares and ProShares UltraShort 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 Volatility Shares with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and ProShares UltraShort.
Diversification Opportunities for Volatility Shares and ProShares UltraShort
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volatility and ProShares is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ProShares UltraShort SmallCap6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Volatility Shares i.e., Volatility Shares and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Volatility Shares and ProShares UltraShort
Given the investment horizon of 90 days Volatility Shares Trust is expected to under-perform the ProShares UltraShort. In addition to that, Volatility Shares is 2.4 times more volatile than ProShares UltraShort SmallCap600. It trades about -0.29 of its total potential returns per unit of risk. ProShares UltraShort SmallCap600 is currently generating about 0.27 per unit of volatility. If you would invest 1,449 in ProShares UltraShort SmallCap600 on November 28, 2024 and sell it today you would earn a total of 165.00 from holding ProShares UltraShort SmallCap600 or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. ProShares UltraShort SmallCap6
Performance |
| Timeline |
| Volatility Shares Trust |
| ProShares UltraShort |
Volatility Shares and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and ProShares UltraShort
The main advantage of trading using opposite Volatility Shares and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, ProShares UltraShort 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 UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Volatility Shares vs. Grayscale Funds Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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