Correlation Between Direxion Daily and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Direxion Daily 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 Daily 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 Daily SP and ProShares Ultra Bloomberg, you can compare the effects of market volatilities on Direxion Daily 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 Daily with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares Ultra.
Diversification Opportunities for Direxion Daily and ProShares Ultra
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and ProShares is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and ProShares Ultra Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Bloomberg and Direxion Daily 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 Daily SP 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 Bloomberg has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares Ultra go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares Ultra
Given the investment horizon of 90 days Direxion Daily SP is expected to generate 0.37 times more return on investment than ProShares Ultra. However, Direxion Daily SP is 2.68 times less risky than ProShares Ultra. It trades about 0.33 of its potential returns per unit of risk. ProShares Ultra Bloomberg is currently generating about 0.06 per unit of risk. If you would invest 941.00 in Direxion Daily SP on September 19, 2024 and sell it today you would earn a total of 182.00 from holding Direxion Daily SP or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. ProShares Ultra Bloomberg
Performance |
| Timeline |
| Direxion Daily SP |
| ProShares Ultra Bloomberg |
Direxion Daily and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares Ultra
The main advantage of trading using opposite Direxion Daily and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily 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 Daily vs. Ultimus Managers Trust | Direxion Daily vs. EA Series Trust | Direxion Daily vs. Global X MLP | Direxion Daily vs. ETRACS Quarterly Pay |
| ProShares Ultra vs. Ultimus Managers Trust | ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. EA Series Trust | ProShares Ultra vs. Global X MLP |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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