Correlation Between ProShares Ultra and AXS 2X
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra and AXS 2X 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 Ultra and AXS 2X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Ultra SP500 and AXS 2X Innovation, you can compare the effects of market volatilities on ProShares Ultra and AXS 2X 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 Ultra with a short position of AXS 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and AXS 2X.
Diversification Opportunities for ProShares Ultra and AXS 2X
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProShares and AXS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra SP500 and AXS 2X Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 2X Innovation and ProShares Ultra 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 Ultra SP500 are associated (or correlated) with AXS 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 2X Innovation has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and AXS 2X go up and down completely randomly.
Pair Corralation between ProShares Ultra and AXS 2X
Considering the 90-day investment horizon ProShares Ultra SP500 is expected to generate 0.33 times more return on investment than AXS 2X. However, ProShares Ultra SP500 is 3.01 times less risky than AXS 2X. It trades about 0.1 of its potential returns per unit of risk. AXS 2X Innovation is currently generating about 0.03 per unit of risk. If you would invest 5,759 in ProShares Ultra SP500 on August 28, 2024 and sell it today you would earn a total of 3,896 from holding ProShares Ultra SP500 or generate 67.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra SP500 vs. AXS 2X Innovation
Performance |
| Timeline |
| ProShares Ultra SP500 |
| AXS 2X Innovation |
ProShares Ultra and AXS 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and AXS 2X
The main advantage of trading using opposite ProShares Ultra and AXS 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra position performs unexpectedly, AXS 2X 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 AXS 2X will offset losses from the drop in AXS 2X's long position.| ProShares Ultra vs. ProShares Ultra QQQ | ProShares Ultra vs. ProShares Ultra Dow30 | ProShares Ultra vs. ProShares UltraShort SP500 | ProShares Ultra vs. ProShares Ultra Financials |
| AXS 2X vs. Direxion Daily SP | AXS 2X vs. Direxion Daily Semiconductor | AXS 2X vs. Direxion Daily Semiconductor |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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