Correlation Between ProShares VIX and Vanguard Mid

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

Diversification Opportunities for ProShares VIX and Vanguard Mid

-0.98

Correlation Coefficient

ProShares VIX  Vanguard Mid

Pay attention - limited upside

The 3 months correlation between ProShares and Vanguard is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap 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 Vanguard Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of ProShares VIX i.e., ProShares VIX and Vanguard Mid go up and down completely randomly.

Pair Corralation between ProShares VIX and Vanguard Mid

Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Vanguard Mid. In addition to that, ProShares VIX is 4.68 times more volatile than Vanguard Mid Cap Index. It trades about -0.12 of its total potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.18 per unit of volatility. If you would invest  25,933  in Vanguard Mid Cap Index on May 4, 2025 and sell it today you would earn a total of  2,261  from holding Vanguard Mid Cap Index or generate 8.72% return on investment over 90 days.

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

ProShares VIX Short Term  vs.  Vanguard Mid Cap Index

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 September 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Vanguard Mid Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vanguard Mid may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ProShares VIX and Vanguard Mid

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

The idea behind ProShares VIX Short Term and Vanguard Mid Cap Index 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.