Correlation Between Volatility Shares and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and ProShares Trust 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 Trust 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 Trust, you can compare the effects of market volatilities on Volatility Shares and ProShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and ProShares Trust.
Diversification Opportunities for Volatility Shares and ProShares Trust
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Volatility and ProShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Volatility Shares i.e., Volatility Shares and ProShares Trust go up and down completely randomly.
Pair Corralation between Volatility Shares and ProShares Trust
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 2.0 times more return on investment than ProShares Trust. However, Volatility Shares is 2.0 times more volatile than ProShares Trust. It trades about 0.27 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.27 per unit of risk. If you would invest 579.00 in Volatility Shares Trust on August 31, 2024 and sell it today you would earn a total of 426.00 from holding Volatility Shares Trust or generate 73.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. ProShares Trust
Performance |
| Timeline |
| Volatility Shares Trust |
| ProShares Trust |
Volatility Shares and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and ProShares Trust
The main advantage of trading using opposite Volatility Shares and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust'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 |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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