Correlation Between VIIX and ProShares

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

By analyzing existing cross correlation between VIIX and ProShares SP 500, you can compare the effects of market volatilities on VIIX and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIIX and ProShares.

Diversification Opportunities for VIIX and ProShares

-0.87

Correlation Coefficient

VIIX  ProShares

Pay attention - limited upside

The 3 months correlation between VIIX and ProShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding VIIX and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of VIIX i.e., VIIX and ProShares go up and down completely randomly.

Pair Corralation between VIIX and ProShares

If you would invest  6,046  in ProShares SP 500 on August 30, 2024 and sell it today you would earn a total of  400.00  from holding ProShares SP 500 or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

VIIX  vs.  ProShares SP 500

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

ProShares SP 500

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, ProShares may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with VIIX and ProShares

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

The idea behind VIIX and ProShares SP 500 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.