Correlation Between ProShares UltraPro and Defiance Daily
Can any of the company-specific risk be diversified away by investing in both ProShares UltraPro and Defiance 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 UltraPro and Defiance Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraPro MidCap400 and Defiance Daily Target, you can compare the effects of market volatilities on ProShares UltraPro and Defiance 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 UltraPro with a short position of Defiance Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraPro and Defiance Daily.
Diversification Opportunities for ProShares UltraPro and Defiance Daily
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Defiance is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraPro MidCap400 and Defiance Daily Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Daily Target and ProShares UltraPro 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 UltraPro MidCap400 are associated (or correlated) with Defiance Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Daily Target has no effect on the direction of ProShares UltraPro i.e., ProShares UltraPro and Defiance Daily go up and down completely randomly.
Pair Corralation between ProShares UltraPro and Defiance Daily
Given the investment horizon of 90 days ProShares UltraPro is expected to generate 8.42 times less return on investment than Defiance Daily. But when comparing it to its historical volatility, ProShares UltraPro MidCap400 is 10.95 times less risky than Defiance Daily. It trades about 0.05 of its potential returns per unit of risk. Defiance Daily Target is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,832 in Defiance Daily Target on September 3, 2024 and sell it today you would lose (1,221) from holding Defiance Daily Target or give up 66.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 15.16% |
| Values | Daily Returns |
ProShares UltraPro MidCap400 vs. Defiance Daily Target
Performance |
| Timeline |
| ProShares UltraPro |
| Defiance Daily Target |
ProShares UltraPro and Defiance Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraPro and Defiance Daily
The main advantage of trading using opposite ProShares UltraPro and Defiance Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraPro position performs unexpectedly, Defiance 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 Defiance Daily will offset losses from the drop in Defiance Daily's long position.| ProShares UltraPro vs. ProShares UltraPro Russell2000 | ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. Direxion Daily Mid | ProShares UltraPro vs. ProShares Ultra SmallCap600 |
| Defiance Daily vs. Tidal Trust II | Defiance Daily vs. Tidal Trust II | Defiance Daily vs. Direxion Daily META | Defiance Daily vs. Direxion Daily META |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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