Correlation Between ProShares VIX and T Rex
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and T Rex 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 VIX and T Rex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares VIX Mid Term and T Rex 2X Inverse, you can compare the effects of market volatilities on ProShares VIX and T Rex 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 VIX with a short position of T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and T Rex.
Diversification Opportunities for ProShares VIX and T Rex
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProShares and ETQ is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Mid Term and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X and ProShares VIX 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 VIX Mid Term are associated (or correlated) with T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of ProShares VIX i.e., ProShares VIX and T Rex go up and down completely randomly.
Pair Corralation between ProShares VIX and T Rex
Given the investment horizon of 90 days ProShares VIX Mid Term is expected to generate 0.23 times more return on investment than T Rex. However, ProShares VIX Mid Term is 4.44 times less risky than T Rex. It trades about -0.04 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about -0.11 per unit of risk. If you would invest 2,543 in ProShares VIX Mid Term on October 25, 2024 and sell it today you would lose (1,103) from holding ProShares VIX Mid Term or give up 43.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 12.17% |
| Values | Daily Returns |
ProShares VIX Mid Term vs. T Rex 2X Inverse
Performance |
| Timeline |
| ProShares VIX Mid |
| T Rex 2X |
ProShares VIX and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and T Rex
The main advantage of trading using opposite ProShares VIX and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.| 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 |
| T Rex vs. ProShares Trust | T Rex vs. iShares Ethereum Trust | T Rex vs. ProShares Trust | T Rex 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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