Correlation Between Direxion Shares and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and ProShares Trust 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 Trust 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 Trust , you can compare the effects of market volatilities on Direxion Shares and ProShares Trust 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 Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and ProShares Trust.
Diversification Opportunities for Direxion Shares and ProShares Trust
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and ProShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Direxion Shares i.e., Direxion Shares and ProShares Trust go up and down completely randomly.
Pair Corralation between Direxion Shares and ProShares Trust
Assuming the 90 days trading horizon Direxion Shares ETF is expected to generate 1.62 times more return on investment than ProShares Trust. However, Direxion Shares is 1.62 times more volatile than ProShares Trust . It trades about 0.01 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.03 per unit of risk. If you would invest 63,553 in Direxion Shares ETF on August 31, 2024 and sell it today you would lose (2,553) from holding Direxion Shares ETF or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Shares ETF vs. ProShares Trust
Performance |
| Timeline |
| Direxion Shares ETF |
| ProShares Trust |
Direxion Shares and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and ProShares Trust
The main advantage of trading using opposite Direxion Shares and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, ProShares Trust 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 Trust will offset losses from the drop in ProShares Trust's long position.| Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. iShares Trust |
| ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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