Correlation Between ProShares VIX and Tidal Trust

Can any of the company-specific risk be diversified away by investing in both ProShares VIX and Tidal Trust 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 Tidal Trust 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 Tidal Trust II, you can compare the effects of market volatilities on ProShares VIX and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and Tidal Trust.

Diversification Opportunities for ProShares VIX and Tidal Trust

0.19

Correlation Coefficient

ProShares VIX  Tidal Trust

Average diversification

The 3 months correlation between ProShares and Tidal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Mid Term and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of ProShares VIX i.e., ProShares VIX and Tidal Trust go up and down completely randomly.

Pair Corralation between ProShares VIX and Tidal Trust

Given the investment horizon of 90 days ProShares VIX Mid Term is expected to under-perform the Tidal Trust. In addition to that, ProShares VIX is 4.99 times more volatile than Tidal Trust II. It trades about -0.03 of its total potential returns per unit of risk. Tidal Trust II is currently generating about 0.11 per unit of volatility. If you would invest  1,950  in Tidal Trust II on September 12, 2024 and sell it today you would earn a total of  361.00  from holding Tidal Trust II or generate 18.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.16%
Values	Daily Returns

ProShares VIX Mid Term  vs.  Tidal Trust II

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 latest stock price disarray, may contribute to short-term losses for the investors.

Tidal Trust II

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Tidal Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares VIX and Tidal Trust

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

The idea behind ProShares VIX Mid Term and Tidal Trust II 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..