Correlation Between ProShares VIX and Simplify Exchange

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

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

Diversification Opportunities for ProShares VIX and Simplify Exchange

-0.66

Correlation Coefficient

ProShares VIX  Simplify Exchange

Excellent diversification

The 3 months correlation between ProShares and Simplify is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Mid Term and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Mid Term are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of ProShares VIX i.e., ProShares VIX and Simplify Exchange go up and down completely randomly.

Pair Corralation between ProShares VIX and Simplify Exchange

Given the investment horizon of 90 days ProShares VIX Mid Term is expected to under-perform the Simplify Exchange. In addition to that, ProShares VIX is 2.1 times more volatile than Simplify Exchange Traded. It trades about -0.06 of its total potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.04 per unit of volatility. If you would invest  2,349  in Simplify Exchange Traded on September 13, 2024 and sell it today you would earn a total of  435.00  from holding Simplify Exchange Traded or generate 18.52% return on investment over 90 days.

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

ProShares VIX Mid Term  vs.  Simplify Exchange Traded

ProShares VIX Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares VIX Mid Term has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ProShares VIX is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Simplify Exchange Traded

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ProShares VIX and Simplify Exchange

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

The idea behind ProShares VIX Mid Term and Simplify Exchange Traded 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.