Correlation Between ProShares VIX and Cboe Validus
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and Cboe Validus 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 Cboe Validus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares VIX Short Term and Cboe Validus SP, you can compare the effects of market volatilities on ProShares VIX and Cboe Validus 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 Cboe Validus. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and Cboe Validus.
Diversification Opportunities for ProShares VIX and Cboe Validus
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Cboe is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and Cboe Validus SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cboe Validus SP 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 Short Term are associated (or correlated) with Cboe Validus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cboe Validus SP has no effect on the direction of ProShares VIX i.e., ProShares VIX and Cboe Validus go up and down completely randomly.
Pair Corralation between ProShares VIX and Cboe Validus
Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Cboe Validus. In addition to that, ProShares VIX is 7.36 times more volatile than Cboe Validus SP. It trades about -0.1 of its total potential returns per unit of risk. Cboe Validus SP is currently generating about 0.23 per unit of volatility. If you would invest 2,376 in Cboe Validus SP on September 12, 2024 and sell it today you would earn a total of 42.00 from holding Cboe Validus SP or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares VIX Short Term vs. Cboe Validus SP
Performance |
| Timeline |
| ProShares VIX Short |
| Cboe Validus SP |
ProShares VIX and Cboe Validus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and Cboe Validus
The main advantage of trading using opposite ProShares VIX and Cboe Validus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, Cboe Validus 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 Cboe Validus will offset losses from the drop in Cboe Validus' long position.| ProShares VIX vs. ProShares Ultra Euro | ProShares VIX vs. ProShares UltraShort Yen | ProShares VIX vs. ProShares Ultra Telecommunications | ProShares VIX vs. ProShares Ultra Consumer |
| Cboe Validus vs. Tidal Trust II | Cboe Validus vs. ProShares VIX Mid Term | Cboe Validus vs. ProShares VIX Short Term | Cboe Validus vs. LHA Market State |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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