Frequently Asked Questions

Dr K VIX Volatility Model
How well do ETFs correlate such as if XIV is up 2%, will its inverse VXX be down -2%?

Buying SVXY/XIV is roughly the equivalent of shorting VIXY/VXX, typically within 2-3%. However, know that on rare occasions, dependent entirely on market conditions, buying SVXY/XIV can result in somewhat different results than shorting VIXY/VXX, and vice versa.

Here are some actual though rare examples where XIV is bought at the same time as VXX is shorted:

Buy XIV. Profit/Loss: 33.2%
Short VXX. Profit/Loss: 27%

Buy XIV. Profit/Loss: 8.3%
Short VXX. Profit/Loss: 19.6%

Actual, rare examples where XIV is shorted at the same time as VXX is bought:

Short XIV. Profit/Loss: -1.1%
Buy VXX. Profit/Loss: 1.2%

Note that these examples are rare as these instruments usually correlate quite well, thus if XIV is up 5%, VXX will be down roughly -5%. 

Published: Aug 29 2016