Correlation Between ProShares UltraPro and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Direxion Shares 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 UltraPro and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro Short and Direxion Shares ETF, you can compare the effects of market volatilities on ProShares UltraPro and Direxion Shares 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 UltraPro with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Direxion Shares.
Diversification Opportunities for ProShares UltraPro and Direxion Shares
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and Direxion is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro Short and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and ProShares UltraPro 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 UltraPro Short are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Direxion Shares go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Direxion Shares
Given the investment horizon of 90 days ProShares UltraPro Short is expected to under-perform the Direxion Shares. But the etf apears to be less risky and, when comparing its historical volatility, ProShares UltraPro Short is 1.32 times less risky than Direxion Shares. The etf trades about -0.16 of its potential returns per unit of risk. The Direxion Shares ETF is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,569 in Direxion Shares ETF on November 1, 2024 and sell it today you would lose (102.00) from holding Direxion Shares ETF or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares UltraPro Short vs. Direxion Shares ETF
Performance |
| Timeline |
| ProShares UltraPro Short |
| Direxion Shares ETF |
ProShares UltraPro and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Direxion Shares
The main advantage of trading using opposite ProShares UltraPro and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| ProShares UltraPro vs. Direxion Daily Energy | ProShares UltraPro vs. Direxion Daily MSCI | ProShares UltraPro vs. Direxion Daily Financial | ProShares UltraPro vs. Direxion Daily Small |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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