Correlation Between Tidal Trust and ProShares VIX
Can any of the company-specific risk be diversified away by investing in both Tidal Trust and ProShares VIX 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 Tidal Trust and ProShares VIX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidal Trust II and ProShares VIX Short Term, you can compare the effects of market volatilities on Tidal Trust and ProShares VIX 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 Tidal Trust with a short position of ProShares VIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and ProShares VIX.
Diversification Opportunities for Tidal Trust and ProShares VIX
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tidal and ProShares is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and ProShares VIX Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares VIX Short and Tidal 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 Tidal Trust II are associated (or correlated) with ProShares VIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares VIX Short has no effect on the direction of Tidal Trust i.e., Tidal Trust and ProShares VIX go up and down completely randomly.
Pair Corralation between Tidal Trust and ProShares VIX
Allowing for the 90-day total investment horizon Tidal Trust II is expected to generate 0.77 times more return on investment than ProShares VIX. However, Tidal Trust II is 1.3 times less risky than ProShares VIX. It trades about -0.04 of its potential returns per unit of risk. ProShares VIX Short Term is currently generating about -0.05 per unit of risk. If you would invest 1,950 in Tidal Trust II on November 19, 2024 and sell it today you would lose (1,240) from holding Tidal Trust II or give up 63.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.23% |
| Values | Daily Returns |
Tidal Trust II vs. ProShares VIX Short Term
Performance |
| Timeline |
| Tidal Trust II |
| ProShares VIX Short |
Tidal Trust and ProShares VIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidal Trust and ProShares VIX
The main advantage of trading using opposite Tidal Trust and ProShares VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, ProShares VIX 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 VIX will offset losses from the drop in ProShares VIX's long position.| Tidal Trust vs. ProShares VIX Mid Term | Tidal Trust vs. ProShares VIX Short Term | Tidal Trust vs. First Trust Alternative | Tidal Trust vs. WisdomTree Managed Futures |
| ProShares VIX vs. ProShares VIX Mid Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra VIX | ProShares VIX vs. iPath Series B |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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