Correlation Between PGIM Ultra and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both PGIM Ultra and Direxion Daily 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 PGIM Ultra and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PGIM Ultra Short and Direxion Daily Aerospace, you can compare the effects of market volatilities on PGIM Ultra and Direxion Daily 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 PGIM Ultra with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of PGIM Ultra and Direxion Daily.
Diversification Opportunities for PGIM Ultra and Direxion Daily
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between PGIM and Direxion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PGIM Ultra Short and Direxion Daily Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Aerospace and PGIM Ultra 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 PGIM Ultra Short are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Aerospace has no effect on the direction of PGIM Ultra i.e., PGIM Ultra and Direxion Daily go up and down completely randomly.
Pair Corralation between PGIM Ultra and Direxion Daily
Given the investment horizon of 90 days PGIM Ultra is expected to generate 54.34 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, PGIM Ultra Short is 183.44 times less risky than Direxion Daily. It trades about 1.09 of its potential returns per unit of risk. Direxion Daily Aerospace is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,723 in Direxion Daily Aerospace on November 3, 2024 and sell it today you would earn a total of 660.00 from holding Direxion Daily Aerospace or generate 24.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
PGIM Ultra Short vs. Direxion Daily Aerospace
Performance |
| Timeline |
| PGIM Ultra Short |
| Direxion Daily Aerospace |
PGIM Ultra and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PGIM Ultra and Direxion Daily
The main advantage of trading using opposite PGIM Ultra and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PGIM Ultra position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| PGIM Ultra vs. Janus Henderson Short | PGIM Ultra vs. iShares Ultra Short Term | PGIM Ultra vs. SPDR Bloomberg Investment | PGIM Ultra vs. Invesco Ultra Short |
| Direxion Daily vs. Direxion Daily Homebuilders | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Regional | Direxion Daily vs. Direxion Daily Industrials |
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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