Correlation Between ProShares Short and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both ProShares Short and Direxion Daily 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 Short and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares Short 20 and Direxion Daily 7 10, you can compare the effects of market volatilities on ProShares Short and Direxion Daily 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 Short with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Short and Direxion Daily.
Diversification Opportunities for ProShares Short and Direxion Daily
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ProShares and Direxion is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Short 20 and Direxion Daily 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily 7 and ProShares Short 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 Short 20 are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily 7 has no effect on the direction of ProShares Short i.e., ProShares Short and Direxion Daily go up and down completely randomly.
Pair Corralation between ProShares Short and Direxion Daily
Considering the 90-day investment horizon ProShares Short 20 is expected to generate 0.6 times more return on investment than Direxion Daily. However, ProShares Short 20 is 1.67 times less risky than Direxion Daily. It trades about 0.13 of its potential returns per unit of risk. Direxion Daily 7 10 is currently generating about 0.08 per unit of risk. If you would invest 2,431 in ProShares Short 20 on October 21, 2024 and sell it today you would earn a total of 42.00 from holding ProShares Short 20 or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Short 20 vs. Direxion Daily 7 10
Performance |
| Timeline |
| ProShares Short 20 |
| Direxion Daily 7 |
ProShares Short and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Short and Direxion Daily
The main advantage of trading using opposite ProShares Short and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Short position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| ProShares Short vs. ProShares Short 7 10 | ProShares Short vs. Direxion Daily 20 | ProShares Short vs. ProShares UltraShort 7 10 | ProShares Short vs. ProShares UltraShort 20 |
| Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily 20 | Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily Real |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |