Correlation Between Direxion Daily and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares Ultra 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 Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Semiconductor and ProShares Ultra Health, you can compare the effects of market volatilities on Direxion Daily and ProShares Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares Ultra.
Diversification Opportunities for Direxion Daily and ProShares Ultra
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and ProShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and ProShares Ultra Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Health 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 Semiconductor are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Health has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares Ultra go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares Ultra
Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to under-perform the ProShares Ultra. In addition to that, Direxion Daily is 3.02 times more volatile than ProShares Ultra Health. It trades about -0.18 of its total potential returns per unit of risk. ProShares Ultra Health is currently generating about -0.05 per unit of volatility. If you would invest 5,142 in ProShares Ultra Health on August 31, 2024 and sell it today you would lose (110.00) from holding ProShares Ultra Health or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Semiconductor vs. ProShares Ultra Health
Performance |
| Timeline |
| Direxion Daily Semic |
| ProShares Ultra Health |
Direxion Daily and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares Ultra
The main advantage of trading using opposite Direxion Daily and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares Ultra 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 Ultra will offset losses from the drop in ProShares Ultra's long position.| Direxion Daily vs. ProShares UltraPro QQQ | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. MicroSectors FANG Index | Direxion Daily vs. Direxion Daily Technology |
| ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra Utilities | ProShares Ultra vs. ProShares Ultra Consumer | ProShares Ultra vs. ProShares Ultra 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |