Correlation Between AXS 2X and ProShares Short

Can any of the company-specific risk be diversified away by investing in both AXS 2X and ProShares Short 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 AXS 2X and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AXS 2X Innovation and ProShares Short VIX, you can compare the effects of market volatilities on AXS 2X and ProShares Short 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 AXS 2X with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 2X and ProShares Short.

Diversification Opportunities for AXS 2X and ProShares Short

-0.27

Correlation Coefficient

AXS 2X  ProShares Short

Very good diversification

The 3 months correlation between AXS and ProShares is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AXS 2X Innovation and ProShares Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short VIX and AXS 2X 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 AXS 2X Innovation are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short VIX has no effect on the direction of AXS 2X i.e., AXS 2X and ProShares Short go up and down completely randomly.

Pair Corralation between AXS 2X and ProShares Short

Given the investment horizon of 90 days AXS 2X is expected to generate 4.08 times less return on investment than ProShares Short. In addition to that, AXS 2X is 2.97 times more volatile than ProShares Short VIX. It trades about 0.01 of its total potential returns per unit of risk. ProShares Short VIX is currently generating about 0.12 per unit of volatility. If you would invest  3,960  in ProShares Short VIX on March 8, 2024 and sell it today you would earn a total of  2,084  from holding ProShares Short VIX or generate 52.63% return on investment over 90 days.

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

AXS 2X Innovation  vs.  ProShares Short VIX

AXS 2X Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXS 2X Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

ProShares Short VIX

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Short VIX are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ProShares Short showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXS 2X and ProShares Short

The main advantage of trading using opposite AXS 2X and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 2X position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.

The idea behind AXS 2X Innovation and ProShares Short VIX 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.