Correlation Between ProShares VIX and ProShares Short
Can any of the company-specific risk be diversified away by investing in both ProShares VIX 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 ProShares VIX and ProShares Short 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 ProShares Short VIX, you can compare the effects of market volatilities on ProShares VIX 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 ProShares VIX with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and ProShares Short.
Diversification Opportunities for ProShares VIX and ProShares Short
-0.97 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and ProShares is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term 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 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 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 ProShares VIX i.e., ProShares VIX and ProShares Short go up and down completely randomly.
Pair Corralation between ProShares VIX and ProShares Short
Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the ProShares Short. In addition to that, ProShares VIX is 2.0 times more volatile than ProShares Short VIX. It trades about -0.15 of its total potential returns per unit of risk. ProShares Short VIX is currently generating about 0.15 per unit of volatility. If you would invest 4,819 in ProShares Short VIX on August 27, 2024 and sell it today you would earn a total of 302.00 from holding ProShares Short VIX or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares VIX Short Term vs. ProShares Short VIX
Performance |
| Timeline |
| ProShares VIX Short |
| ProShares Short VIX |
ProShares VIX and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and ProShares Short
The main advantage of trading using opposite ProShares VIX and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX 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.| ProShares VIX vs. ProShares VIX Mid Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra VIX | ProShares VIX vs. iPath Series B |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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