Correlation Between Simplify Exchange and ProShares VIX

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

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

Diversification Opportunities for Simplify Exchange and ProShares VIX

-0.52

Correlation Coefficient

Simplify Exchange  ProShares VIX

Excellent diversification

The 3 months correlation between Simplify and ProShares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded 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 Simplify Exchange 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 Simplify Exchange Traded 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 Simplify Exchange i.e., Simplify Exchange and ProShares VIX go up and down completely randomly.

Pair Corralation between Simplify Exchange and ProShares VIX

Considering the 90-day investment horizon Simplify Exchange Traded is expected to generate 0.32 times more return on investment than ProShares VIX. However, Simplify Exchange Traded is 3.14 times less risky than ProShares VIX. It trades about 0.27 of its potential returns per unit of risk. ProShares VIX Short Term is currently generating about -0.03 per unit of risk. If you would invest  2,672  in Simplify Exchange Traded on September 14, 2024 and sell it today you would earn a total of  124.00  from holding Simplify Exchange Traded or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Simplify Exchange Traded  vs.  ProShares VIX Short Term

Simplify Exchange Traded

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ProShares VIX Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares VIX Short Term has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Simplify Exchange and ProShares VIX

The main advantage of trading using opposite Simplify Exchange and ProShares VIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange 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 Simplify Exchange Traded 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.