Correlation Between VIIX and ProShares VIX

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

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

Diversification Opportunities for VIIX and ProShares VIX

0.0

Correlation Coefficient

VIIX  ProShares VIX

Pay attention - limited upside

The 3 months correlation between VIIX and ProShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and ProShares VIX Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares VIX Short 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 VIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares VIX Short has no effect on the direction of VIIX i.e., VIIX and ProShares VIX go up and down completely randomly.

Pair Corralation between VIIX and ProShares VIX

If you would invest  4,473  in ProShares VIX Short Term on December 28, 2024 and sell it today you would earn a total of  160.00  from holding ProShares VIX Short Term or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

VIIX  vs.  ProShares VIX Short Term

VIIX

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to short-term losses for the investors.

ProShares VIX Short

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares VIX Short Term are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ProShares VIX may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VIIX and ProShares VIX

The main advantage of trading using opposite VIIX and ProShares VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIIX position performs unexpectedly, ProShares VIX 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 VIX will offset losses from the drop in ProShares VIX's long position.

The idea behind VIIX and ProShares VIX Short Term 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.