Correlation Between IShares 20 and ProShares Short
Can any of the company-specific risk be diversified away by investing in both IShares 20 and ProShares 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 IShares 20 and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 20 Year and ProShares Short VIX, you can compare the effects of market volatilities on IShares 20 and ProShares 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 IShares 20 with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 20 and ProShares Short.
Diversification Opportunities for IShares 20 and ProShares Short
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and ProShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding iShares 20 Year and ProShares Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short VIX and IShares 20 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 iShares 20 Year are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short VIX has no effect on the direction of IShares 20 i.e., IShares 20 and ProShares Short go up and down completely randomly.
Pair Corralation between IShares 20 and ProShares Short
Considering the 90-day investment horizon iShares 20 Year is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, iShares 20 Year is 2.19 times less risky than ProShares Short. The etf trades about -0.01 of its potential returns per unit of risk. The ProShares Short VIX is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,403 in ProShares Short VIX on August 31, 2024 and sell it today you would earn a total of 1,855 from holding ProShares Short VIX or generate 54.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 20 Year vs. ProShares Short VIX
Performance |
| Timeline |
| iShares 20 Year |
| ProShares Short VIX |
IShares 20 and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 20 and ProShares Short
The main advantage of trading using opposite IShares 20 and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 20 position performs unexpectedly, ProShares 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| IShares 20 vs. iShares 7 10 Year | IShares 20 vs. iShares 1 3 Year | IShares 20 vs. iShares Russell 2000 | IShares 20 vs. iShares iBoxx Investment |
| ProShares Short vs. ProShares Ultra VIX | ProShares Short vs. ProShares VIX Short Term | ProShares Short vs. iPath Series B | ProShares Short vs. Direxion Daily Gold |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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