Correlation Between Direxion Daily and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Direxion Daily 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 Daily 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 Daily Semiconductor and ProShares Trust , you can compare the effects of market volatilities on Direxion Daily 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 Daily with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares Trust.
Diversification Opportunities for Direxion Daily and ProShares Trust
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and ProShares is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust 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 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 Daily i.e., Direxion Daily and ProShares Trust go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares Trust
Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to generate 2.0 times more return on investment than ProShares Trust. However, Direxion Daily is 2.0 times more volatile than ProShares Trust . It trades about 0.03 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.08 per unit of risk. If you would invest 2,677 in Direxion Daily Semiconductor on August 31, 2024 and sell it today you would lose (217.00) from holding Direxion Daily Semiconductor or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Semiconductor vs. ProShares Trust
Performance |
| Timeline |
| Direxion Daily Semic |
| ProShares Trust |
Direxion Daily and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares Trust
The main advantage of trading using opposite Direxion Daily and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily 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 Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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