Correlation Between ProShares VIX and WisdomTree MidCap

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

Diversification Opportunities for ProShares VIX and WisdomTree MidCap

-0.63

Correlation Coefficient

ProShares VIX  WisdomTree MidCap

Excellent diversification

The 3 months correlation between ProShares and WisdomTree is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and WisdomTree MidCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of ProShares VIX i.e., ProShares VIX and WisdomTree MidCap go up and down completely randomly.

Pair Corralation between ProShares VIX and WisdomTree MidCap

Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the WisdomTree MidCap. In addition to that, ProShares VIX is 3.68 times more volatile than WisdomTree MidCap Dividend. It trades about -0.16 of its total potential returns per unit of risk. WisdomTree MidCap Dividend is currently generating about 0.11 per unit of volatility. If you would invest  4,799  in WisdomTree MidCap Dividend on May 2, 2025 and sell it today you would earn a total of  286.00  from holding WisdomTree MidCap Dividend or generate 5.96% return on investment over 90 days.

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

ProShares VIX Short Term  vs.  WisdomTree MidCap Dividend

ProShares VIX Short

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

WisdomTree MidCap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree MidCap Dividend are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, WisdomTree MidCap is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares VIX and WisdomTree MidCap

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

The idea behind ProShares VIX Short Term and WisdomTree MidCap Dividend 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.