Correlation Between ProShares Short and 1x Short
Can any of the company-specific risk be diversified away by investing in both ProShares Short and 1x 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 ProShares Short and 1x Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short Dow30 and 1x Short VIX, you can compare the effects of market volatilities on ProShares Short and 1x 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 ProShares Short with a short position of 1x Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and 1x Short.
Diversification Opportunities for ProShares Short and 1x Short
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and SVIX is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short Dow30 and 1x Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1x Short VIX and ProShares Short 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 ProShares Short Dow30 are associated (or correlated) with 1x Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1x Short VIX has no effect on the direction of ProShares Short i.e., ProShares Short and 1x Short go up and down completely randomly.
Pair Corralation between ProShares Short and 1x Short
Considering the 90-day investment horizon ProShares Short Dow30 is expected to under-perform the 1x Short. But the etf apears to be less risky and, when comparing its historical volatility, ProShares Short Dow30 is 4.8 times less risky than 1x Short. The etf trades about -0.06 of its potential returns per unit of risk. The 1x Short VIX is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,616 in 1x Short VIX on October 24, 2024 and sell it today you would lose (26.00) from holding 1x Short VIX or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short Dow30 vs. 1x Short VIX
Performance |
| Timeline |
| ProShares Short Dow30 |
| 1x Short VIX |
ProShares Short and 1x Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and 1x Short
The main advantage of trading using opposite ProShares Short and 1x Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, 1x 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 1x Short will offset losses from the drop in 1x Short's long position.| ProShares Short vs. ProShares Short QQQ | ProShares Short vs. ProShares Short SP500 | ProShares Short vs. ProShares UltraShort Dow30 | ProShares Short vs. ProShares Short Russell2000 |
| 1x Short vs. 2x Long VIX | 1x Short vs. ProShares VIX Mid Term | 1x Short vs. ProShares Short VIX | 1x Short vs. AXS 2X Innovation |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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