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
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and ProShares is 0.6. 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
Given the investment horizon of 90 days Direxion Shares is expected to generate 2.32 times less return on investment than ProShares Trust. But when comparing it to its historical volatility, Direxion Shares ETF is 1.73 times less risky than ProShares Trust. It trades about 0.21 of its potential returns per unit of risk. ProShares Trust is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,196 in ProShares Trust on November 28, 2024 and sell it today you would earn a total of 317.00 from holding ProShares Trust or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| 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. FT Vest Equity | Direxion Shares vs. Northern Lights | Direxion Shares vs. Dimensional International High | Direxion Shares vs. First Trust Exchange Traded |
| ProShares Trust vs. AXS TSLA Bear | ProShares Trust vs. Tuttle Capital Short | ProShares Trust vs. ProShares Bitcoin Strategy | ProShares Trust vs. ProShares UltraShort Bloomberg |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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