Correlation Between Volatility Shares and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Volatility Shares 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 Volatility Shares and ProShares Short 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 Short Financials, you can compare the effects of market volatilities on Volatility Shares 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 Volatility Shares with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and ProShares Short.
Diversification Opportunities for Volatility Shares and ProShares Short
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volatility and ProShares is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ProShares Short Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Fina 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 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 Fina has no effect on the direction of Volatility Shares i.e., Volatility Shares and ProShares Short go up and down completely randomly.
Pair Corralation between Volatility Shares and ProShares Short
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 7.5 times more return on investment than ProShares Short. However, Volatility Shares is 7.5 times more volatile than ProShares Short Financials. It trades about 0.08 of its potential returns per unit of risk. ProShares Short Financials is currently generating about -0.15 per unit of risk. If you would invest 4,013 in Volatility Shares Trust on September 1, 2024 and sell it today you would earn a total of 2,007 from holding Volatility Shares Trust or generate 50.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Volatility Shares Trust vs. ProShares Short Financials
Performance |
| Timeline |
| Volatility Shares Trust |
| ProShares Short Fina |
Volatility Shares and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and ProShares Short
The main advantage of trading using opposite Volatility Shares and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares 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.| Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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