Correlation Between ProShares Trust and Volatility Shares
Can any of the company-specific risk be diversified away by investing in both ProShares Trust and Volatility Shares 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 Trust and Volatility Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Trust and Volatility Shares Trust, you can compare the effects of market volatilities on ProShares Trust and Volatility Shares 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 Trust with a short position of Volatility Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and Volatility Shares.
Diversification Opportunities for ProShares Trust and Volatility Shares
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Volatility is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares Trust and ProShares Trust 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 Trust are associated (or correlated) with Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of ProShares Trust i.e., ProShares Trust and Volatility Shares go up and down completely randomly.
Pair Corralation between ProShares Trust and Volatility Shares
Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Volatility Shares. In addition to that, ProShares Trust is 1.23 times more volatile than Volatility Shares Trust. It trades about -0.2 of its total potential returns per unit of risk. Volatility Shares Trust is currently generating about 0.28 per unit of volatility. If you would invest 2,770 in Volatility Shares Trust on August 30, 2024 and sell it today you would earn a total of 3,194 from holding Volatility Shares Trust or generate 115.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Trust vs. Volatility Shares Trust
Performance |
| Timeline |
| ProShares Trust |
| Volatility Shares Trust |
ProShares Trust and Volatility Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Trust and Volatility Shares
The main advantage of trading using opposite ProShares Trust and Volatility Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Trust position performs unexpectedly, Volatility Shares 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 Volatility Shares will offset losses from the drop in Volatility Shares' long position.| ProShares Trust vs. ProShares Trust | ProShares Trust vs. iShares Ethereum Trust | ProShares Trust vs. Grayscale Ethereum Trust | ProShares Trust vs. ProShares Trust |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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