Correlation Between VIIX and ProShares Short

Can any of the company-specific risk be diversified away by investing in both VIIX 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 VIIX and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIIX and ProShares Short VIX, you can compare the effects of market volatilities on VIIX 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 VIIX with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIIX and ProShares Short.

Diversification Opportunities for VIIX and ProShares Short

-0.56

Correlation Coefficient

VIIX  ProShares Short

Excellent diversification

The 3 months correlation between VIIX and ProShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding VIIX 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 VIIX 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 VIIX 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 VIIX i.e., VIIX and ProShares Short go up and down completely randomly.

Pair Corralation between VIIX and ProShares Short

If you would invest  5,028  in ProShares Short VIX on September 15, 2024 and sell it today you would earn a total of  301.00  from holding ProShares Short VIX or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

VIIX  vs.  ProShares Short VIX

VIIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, VIIX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ProShares Short VIX

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short VIX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, ProShares Short may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VIIX and ProShares Short

The main advantage of trading using opposite VIIX and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIIX 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.

The idea behind VIIX and ProShares Short VIX pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.