Correlation Between ProShares VIX and Tidal ETF

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

Diversification Opportunities for ProShares VIX and Tidal ETF

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between ProShares and Tidal is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short-Term and Tidal ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal ETF Trust 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 Short Term are associated (or correlated) with Tidal ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal ETF Trust has no effect on the direction of ProShares VIX i.e., ProShares VIX and Tidal ETF go up and down completely randomly.

Pair Corralation between ProShares VIX and Tidal ETF

Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Tidal ETF. In addition to that, ProShares VIX is 2.59 times more volatile than Tidal ETF Trust. It trades about -0.1 of its total potential returns per unit of risk. Tidal ETF Trust is currently generating about -0.09 per unit of volatility. If you would invest  1,361  in Tidal ETF Trust on December 1, 2023 and sell it today you would lose (54.00) from holding Tidal ETF Trust or give up 3.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.56%
ValuesDaily Returns

ProShares VIX Short-Term  vs.  Tidal ETF Trust

 Performance 
       Timeline  
ProShares VIX Short-Term 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 fragile performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in March 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.
Tidal ETF Trust 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Tidal ETF Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tidal ETF is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ProShares VIX and Tidal ETF Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ProShares VIX and Tidal ETF

The main advantage of trading using opposite ProShares VIX and Tidal ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, Tidal ETF 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 ETF will offset losses from the drop in Tidal ETF's long position.
The idea behind ProShares VIX Short Term and Tidal ETF Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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