There are charts from GS or JPM (I can't remember which one) which show the performance of the most shorted stocks in the market. It's a straight line down (something like -7% annualized) and it also underperforms during crashes like 2008, 2020... Even including gamestop and AMC you only see a tiny rally in 2021 but the general line is down. Meaning it is a very effective hedge against the stock market.
The explaination could simply be that mainly only smart money short stocks, and they tend to be pretty good at figuring out issues in companies that are not yet fully priced in.
If I were to run a short ETF, I would add filters such as market cap, short interest and day to covers to avoid liquidity issues and squeezes, and/or play it through options structures. Like, it would have been stupid to be short GME when it had 300% of float as short interest. But it is probably fine in a lot of case with a sufficiently low day-to-covers and short interest. A more active strategy would be to monitor the Fee Rate which gives a good indication of the stock supply and is more "real time" than short interest data which often lags a few days/weeks.