Correlation Between DSJA and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both DSJA 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 DSJA and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DSJA and ProShares Ultra Consumer, you can compare the effects of market volatilities on DSJA 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 DSJA with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSJA and ProShares Ultra.
Diversification Opportunities for DSJA and ProShares Ultra
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DSJA and ProShares is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and ProShares Ultra Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Consumer and DSJA 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 DSJA 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 Consumer has no effect on the direction of DSJA i.e., DSJA and ProShares Ultra go up and down completely randomly.
Pair Corralation between DSJA and ProShares Ultra
Given the investment horizon of 90 days DSJA is expected to generate 0.25 times more return on investment than ProShares Ultra. However, DSJA is 4.05 times less risky than ProShares Ultra. It trades about 0.39 of its potential returns per unit of risk. ProShares Ultra Consumer is currently generating about 0.02 per unit of risk. If you would invest 2,677 in DSJA on August 27, 2024 and sell it today you would earn a total of 188.00 from holding DSJA or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 13.99% |
| Values | Daily Returns |
DSJA vs. ProShares Ultra Consumer
Performance |
| Timeline |
| DSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ProShares Ultra Consumer |
DSJA and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DSJA and ProShares Ultra
The main advantage of trading using opposite DSJA and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA 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.The idea behind DSJA and ProShares Ultra Consumer 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.| ProShares Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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