diversifiable risk of combining ProShares VIX and Simplify Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares VIX Short Term and Simplify Macro Strategy, you can compare the effects of market volatilities on ProShares VIX and Simplify Macro 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 Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and Simplify Macro.
Diversification Opportunities for ProShares VIX and Simplify Macro
Pair Corralation between ProShares VIX and Simplify Macro
Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Simplify Macro. In addition to that, ProShares VIX is 8.19 times more volatile than Simplify Macro Strategy. It trades about -0.17 of its total potential returns per unit of risk. Simplify Macro Strategy is currently generating about -0.15 per unit of volatility. If you would invest 2,295 in Simplify Macro Strategy on December 3, 2023 and sell it today you would lose (23.00) from holding Simplify Macro Strategy or give up 1.0% of portfolio value over 90 days.
ProShares VIX Short-Term vs. Simplify Macro Strategy
ProShares VIX and Simplify Macro Volatility Contrast
Pair Trading with ProShares VIX and Simplify MacroThe main advantage of trading using opposite ProShares VIX and Simplify Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, Simplify Macro 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 Macro will offset losses from the drop in Simplify Macro's long position. The idea behind ProShares VIX Short Term and Simplify Macro Strategy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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