Correlation Between ProShares VIX and IPath Series
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and IPath Series 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 IPath Series 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 iPath Series B, you can compare the effects of market volatilities on ProShares VIX and IPath Series 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 IPath Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and IPath Series.
Diversification Opportunities for ProShares VIX and IPath Series
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ProShares and IPath is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Mid Term and iPath Series B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Series B 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 IPath Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Series B has no effect on the direction of ProShares VIX i.e., ProShares VIX and IPath Series go up and down completely randomly.
Pair Corralation between ProShares VIX and IPath Series
Given the investment horizon of 90 days ProShares VIX is expected to generate 1.06 times less return on investment than IPath Series. But when comparing it to its historical volatility, ProShares VIX Mid Term is 1.08 times less risky than IPath Series. It trades about 0.09 of its potential returns per unit of risk. iPath Series B is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,690 in iPath Series B on April 18, 2025 and sell it today you would earn a total of 260.00 from holding iPath Series B or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares VIX Mid Term vs. iPath Series B
Performance |
| Timeline |
| ProShares VIX Mid |
| iPath Series B |
ProShares VIX and IPath Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and IPath Series
The main advantage of trading using opposite ProShares VIX and IPath Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, IPath Series 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 IPath Series will offset losses from the drop in IPath Series' long position.| ProShares VIX vs. iPath Series B | ProShares VIX vs. ProShares VIX Short Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra 20 |
| IPath Series vs. ProShares VIX Mid Term | IPath Series vs. ProShares VIX Short Term | IPath Series vs. iPath Series B | IPath Series vs. ProShares Short VIX |
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..
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