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 High and Direxion Daily 20, 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
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProShares and Direxion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra High and Direxion Daily 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily 20 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 High 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 20 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 is expected to generate 8.47 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, ProShares Ultra High is 7.09 times less risky than Direxion Daily. It trades about 0.06 of its potential returns per unit of risk. Direxion Daily 20 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,295 in Direxion Daily 20 on September 13, 2024 and sell it today you would earn a total of 249.00 from holding Direxion Daily 20 or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares Ultra High vs. Direxion Daily 20
Performance |
| Timeline |
| ProShares Ultra High |
| Direxion Daily 20 |
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. ProShares Ultra FTSE | ProShares Ultra vs. ProShares Ultra MSCI | ProShares Ultra vs. ProShares Ultra 20 | ProShares Ultra vs. ProShares Ultra MSCI |
| Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily 20 | Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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