Correlation Between ProShares Ultra and Direxion
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and Direxion 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 ProShares Ultra and Direxion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra QQQ and Direxion, you can compare the effects of market volatilities on ProShares Ultra and Direxion 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 ProShares Ultra with a short position of Direxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Direxion.
Diversification Opportunities for ProShares Ultra and Direxion
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ProShares and Direxion is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra QQQ and Direxion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion and ProShares 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 ProShares Ultra QQQ are associated (or correlated) with Direxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Direxion go up and down completely randomly.
Pair Corralation between ProShares Ultra and Direxion
If you would invest 6,933 in ProShares Ultra QQQ on September 14, 2024 and sell it today you would earn a total of 4,737 from holding ProShares Ultra QQQ or generate 68.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.37% |
| Values | Daily Returns |
ProShares Ultra QQQ vs. Direxion
Performance |
| Timeline |
| ProShares Ultra QQQ |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ProShares Ultra and Direxion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Direxion
The main advantage of trading using opposite ProShares Ultra and Direxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, Direxion 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 will offset losses from the drop in Direxion's long position.| ProShares Ultra vs. ProShares Ultra SP500 | ProShares Ultra vs. ProShares UltraShort QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares Ultra Russell2000 |
| Direxion vs. ProShares Ultra SP500 | Direxion vs. Direxion Daily SP | Direxion vs. Direxion Daily SP | Direxion vs. MicroSectors FANG Index |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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