Correlation Between Defiance Nasdaq and ProShares VIX
Can any of the company-specific risk be diversified away by investing in both Defiance Nasdaq 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 Defiance Nasdaq and ProShares VIX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Nasdaq 100 and ProShares VIX Mid Term, you can compare the effects of market volatilities on Defiance Nasdaq 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 Defiance Nasdaq with a short position of ProShares VIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Nasdaq and ProShares VIX.
Diversification Opportunities for Defiance Nasdaq and ProShares VIX
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Defiance and ProShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Nasdaq 100 and ProShares VIX Mid Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares VIX Mid and Defiance Nasdaq 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 Defiance Nasdaq 100 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 Mid has no effect on the direction of Defiance Nasdaq i.e., Defiance Nasdaq and ProShares VIX go up and down completely randomly.
Pair Corralation between Defiance Nasdaq and ProShares VIX
Given the investment horizon of 90 days Defiance Nasdaq 100 is expected to generate 0.32 times more return on investment than ProShares VIX. However, Defiance Nasdaq 100 is 3.15 times less risky than ProShares VIX. It trades about 0.09 of its potential returns per unit of risk. ProShares VIX Mid Term is currently generating about -0.03 per unit of risk. If you would invest 2,733 in Defiance Nasdaq 100 on September 3, 2024 and sell it today you would earn a total of 585.00 from holding Defiance Nasdaq 100 or generate 21.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.03% |
| Values | Daily Returns |
Defiance Nasdaq 100 vs. ProShares VIX Mid Term
Performance |
| Timeline |
| Defiance Nasdaq 100 |
| ProShares VIX Mid |
Defiance Nasdaq and ProShares VIX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defiance Nasdaq and ProShares VIX
The main advantage of trading using opposite Defiance Nasdaq and ProShares VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Nasdaq 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.| Defiance Nasdaq vs. First Trust Dorsey | Defiance Nasdaq vs. Direxion Daily MSCI | Defiance Nasdaq vs. MFUT | Defiance Nasdaq vs. VanEck Morningstar Wide |
| ProShares VIX vs. iPath Series B | ProShares VIX vs. ProShares VIX Short Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra 20 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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