Correlation Between ProShares VIX and VelocityShares Daily
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and VelocityShares Daily 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 VelocityShares Daily 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 VelocityShares Daily 2x, you can compare the effects of market volatilities on ProShares VIX and VelocityShares Daily 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 VelocityShares Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and VelocityShares Daily.
Diversification Opportunities for ProShares VIX and VelocityShares Daily
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ProShares and VelocityShares is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and VelocityShares Daily 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VelocityShares Daily 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 VelocityShares Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VelocityShares Daily has no effect on the direction of ProShares VIX i.e., ProShares VIX and VelocityShares Daily go up and down completely randomly.
Pair Corralation between ProShares VIX and VelocityShares Daily
If you would invest 35.00 in VelocityShares Daily 2x on September 3, 2024 and sell it today you would earn a total of 0.00 from holding VelocityShares Daily 2x or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
ProShares VIX Short Term vs. VelocityShares Daily 2x
Performance |
| Timeline |
| ProShares VIX Short |
| VelocityShares Daily |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares VIX and VelocityShares Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and VelocityShares Daily
The main advantage of trading using opposite ProShares VIX and VelocityShares Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, VelocityShares Daily 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 VelocityShares Daily will offset losses from the drop in VelocityShares Daily'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 |
| VelocityShares Daily vs. ProShares VIX Short Term | VelocityShares Daily vs. ProShares Short VIX | VelocityShares Daily vs. ProShares VIX Mid Term | VelocityShares Daily vs. ProShares Ultra VIX |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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