Correlation Between Direxion Daily and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares Short 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 Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily 7 10 and ProShares Short 7 10, you can compare the effects of market volatilities on Direxion Daily and ProShares Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares Short.
Diversification Opportunities for Direxion Daily and ProShares Short
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Direxion and ProShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 7 10 and ProShares Short 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short 7 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 7 10 are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short 7 has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares Short go up and down completely randomly.
Pair Corralation between Direxion Daily and ProShares Short
Considering the 90-day investment horizon Direxion Daily 7 10 is expected to generate 2.92 times more return on investment than ProShares Short. However, Direxion Daily is 2.92 times more volatile than ProShares Short 7 10. It trades about 0.03 of its potential returns per unit of risk. ProShares Short 7 10 is currently generating about 0.05 per unit of risk. If you would invest 1,173 in Direxion Daily 7 10 on August 26, 2024 and sell it today you would earn a total of 270.00 from holding Direxion Daily 7 10 or generate 23.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily 7 10 vs. ProShares Short 7 10
Performance |
| Timeline |
| Direxion Daily 7 |
| ProShares Short 7 |
Direxion Daily and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ProShares Short
The main advantage of trading using opposite Direxion Daily and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short's long position.| 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 |
| ProShares Short vs. Direxion Daily 20 | ProShares Short vs. Direxion Daily 7 10 | ProShares Short vs. ProShares Short 20 |
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
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |