Correlation Between Direxion Daily and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares UltraPro 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 UltraPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP and ProShares UltraPro Short, you can compare the effects of market volatilities on Direxion Daily and ProShares UltraPro 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 UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares UltraPro.
Diversification Opportunities for Direxion Daily and ProShares UltraPro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and ProShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 SP are associated (or correlated) with ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares UltraPro go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares UltraPro
Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the ProShares UltraPro. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily SP is 1.32 times less risky than ProShares UltraPro. The etf trades about -0.13 of its potential returns per unit of risk. The ProShares UltraPro Short is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,460 in ProShares UltraPro Short on August 30, 2024 and sell it today you would lose (119.00) from holding ProShares UltraPro Short or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. ProShares UltraPro Short
Performance |
| Timeline |
| Direxion Daily SP |
| ProShares UltraPro Short |
Direxion Daily and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares UltraPro
The main advantage of trading using opposite Direxion Daily and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.| Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. Direxion Daily Small | Direxion Daily vs. ProShares UltraPro Short | Direxion Daily vs. ProShares UltraPro Short |
| ProShares UltraPro vs. ProShares UltraPro QQQ | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares Ultra VIX |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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