Correlation Between Direxion Daily and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares UltraPro 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 UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Energy and ProShares UltraPro Short, you can compare the effects of market volatilities on Direxion Daily and ProShares UltraPro 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 UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares UltraPro.
Diversification Opportunities for Direxion Daily and ProShares UltraPro
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and ProShares is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Energy and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 Energy are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares UltraPro go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares UltraPro
Considering the 90-day investment horizon Direxion Daily Energy is expected to generate 1.07 times more return on investment than ProShares UltraPro. However, Direxion Daily is 1.07 times more volatile than ProShares UltraPro Short. It trades about 0.02 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.09 per unit of risk. If you would invest 5,703 in Direxion Daily Energy on November 9, 2024 and sell it today you would earn a total of 180.00 from holding Direxion Daily Energy or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Energy vs. ProShares UltraPro Short
Performance |
| Timeline |
| Direxion Daily Energy |
| ProShares UltraPro Short |
Direxion Daily and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares UltraPro
The main advantage of trading using opposite Direxion Daily and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.| Direxion Daily vs. Direxion Daily Energy | Direxion Daily vs. Direxion Daily Financial | Direxion Daily vs. Direxion Daily Small | Direxion Daily vs. Direxion Daily MSCI |
| ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro SP500 | ProShares UltraPro vs. Direxion Daily SP |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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