Correlation Between ProShares VIX and Fidelity Covington

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

Diversification Opportunities for ProShares VIX and Fidelity Covington

-0.7

Correlation Coefficient

ProShares VIX  Fidelity Covington

Excellent diversification

The 3 months correlation between ProShares and Fidelity is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington 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 Fidelity Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of ProShares VIX i.e., ProShares VIX and Fidelity Covington go up and down completely randomly.

Pair Corralation between ProShares VIX and Fidelity Covington

Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Fidelity Covington. In addition to that, ProShares VIX is 2.95 times more volatile than Fidelity Covington Trust. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.08 per unit of volatility. If you would invest  3,587  in Fidelity Covington Trust on September 7, 2025 and sell it today you would earn a total of  229.00  from holding Fidelity Covington Trust or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

ProShares VIX Short Term  vs.  Fidelity Covington Trust

ProShares VIX Short

Risk-Adjusted Performance

Weakest

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 latest fragile performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Fidelity Covington Trust

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Covington Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Fidelity Covington may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with ProShares VIX and Fidelity Covington

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

The idea behind ProShares VIX Short Term and Fidelity Covington 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.