Correlation Between ProShares VIX and WisdomTree Managed
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and WisdomTree Managed 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 WisdomTree Managed 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 WisdomTree Managed Futures, you can compare the effects of market volatilities on ProShares VIX and WisdomTree Managed 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 WisdomTree Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and WisdomTree Managed.
Diversification Opportunities for ProShares VIX and WisdomTree Managed
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and WisdomTree is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Mid Term and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed 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 WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of ProShares VIX i.e., ProShares VIX and WisdomTree Managed go up and down completely randomly.
Pair Corralation between ProShares VIX and WisdomTree Managed
Given the investment horizon of 90 days ProShares VIX Mid Term is expected to under-perform the WisdomTree Managed. In addition to that, ProShares VIX is 2.5 times more volatile than WisdomTree Managed Futures. It trades about -0.05 of its total potential returns per unit of risk. WisdomTree Managed Futures is currently generating about 0.08 per unit of volatility. If you would invest 3,498 in WisdomTree Managed Futures on November 2, 2024 and sell it today you would earn a total of 35.00 from holding WisdomTree Managed Futures or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares VIX Mid Term vs. WisdomTree Managed Futures
Performance |
| Timeline |
| ProShares VIX Mid |
| WisdomTree Managed |
ProShares VIX and WisdomTree Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and WisdomTree Managed
The main advantage of trading using opposite ProShares VIX and WisdomTree Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, WisdomTree Managed 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 WisdomTree Managed will offset losses from the drop in WisdomTree Managed'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 |
| WisdomTree Managed vs. First Trust Managed | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. WisdomTree CBOE SP |
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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