Correlation Between ProShares Ultra and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 Ultra 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 Ultra MSCI and Direxion Daily MSCI, you can compare the effects of market volatilities on ProShares Ultra 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 Ultra with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Direxion Daily.
Diversification Opportunities for ProShares Ultra and Direxion Daily
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ProShares and Direxion is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra MSCI and Direxion Daily MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily MSCI 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 MSCI 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 MSCI has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Direxion Daily go up and down completely randomly.
Pair Corralation between ProShares Ultra and Direxion Daily
Considering the 90-day investment horizon ProShares Ultra MSCI is expected to under-perform the Direxion Daily. In addition to that, ProShares Ultra is 1.26 times more volatile than Direxion Daily MSCI. It trades about -0.15 of its total potential returns per unit of risk. Direxion Daily MSCI is currently generating about 0.05 per unit of volatility. If you would invest 803.00 in Direxion Daily MSCI on September 12, 2024 and sell it today you would earn a total of 18.00 from holding Direxion Daily MSCI or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra MSCI vs. Direxion Daily MSCI
Performance |
| Timeline |
| ProShares Ultra MSCI |
| Direxion Daily MSCI |
ProShares Ultra and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Direxion Daily
The main advantage of trading using opposite ProShares Ultra and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 Ultra vs. Freedom Day Dividend | ProShares Ultra vs. Franklin Templeton ETF | ProShares Ultra vs. iShares MSCI China | ProShares Ultra vs. Tidal Trust II |
| Direxion Daily vs. ProShares UltraShort MSCI | Direxion Daily vs. ProShares UltraShort MSCI | Direxion Daily vs. ProShares UltraShort Euro | Direxion Daily vs. ProShares UltraShort MSCI |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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