Correlation Between Direxion Shares and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and ProShares Ultra 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 Direxion Shares and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Shares ETF and ProShares Ultra SP500, you can compare the effects of market volatilities on Direxion Shares and ProShares Ultra 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 Direxion Shares with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and ProShares Ultra.
Diversification Opportunities for Direxion Shares and ProShares Ultra
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and ProShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and ProShares Ultra SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra SP500 and Direxion Shares 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 Direxion Shares ETF are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra SP500 has no effect on the direction of Direxion Shares i.e., Direxion Shares and ProShares Ultra go up and down completely randomly.
Pair Corralation between Direxion Shares and ProShares Ultra
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 2.46 times more return on investment than ProShares Ultra. However, Direxion Shares is 2.46 times more volatile than ProShares Ultra SP500. It trades about 0.21 of its potential returns per unit of risk. ProShares Ultra SP500 is currently generating about 0.13 per unit of risk. If you would invest 3,615 in Direxion Shares ETF on November 18, 2024 and sell it today you would earn a total of 519.00 from holding Direxion Shares ETF or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Shares ETF vs. ProShares Ultra SP500
Performance |
| Timeline |
| Direxion Shares ETF |
| ProShares Ultra SP500 |
Direxion Shares and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and ProShares Ultra
The main advantage of trading using opposite Direxion Shares and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.| Direxion Shares vs. iShares Dividend and | Direxion Shares vs. Martin Currie Sustainable | Direxion Shares vs. VictoryShares THB Mid | Direxion Shares vs. Mast Global Battery |
| ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares UltraShort SP500 | ProShares Ultra vs. ProShares Ultra Financials |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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