Correlation Between ProShares Ultra and Defiance Daily
Can any of the company-specific risk be diversified away by investing in both ProShares Ultra 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 Ultra 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 Ultra Financials and Defiance Daily Target, you can compare the effects of market volatilities on ProShares Ultra 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 Ultra with a short position of Defiance Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Defiance Daily.
Diversification Opportunities for ProShares Ultra and Defiance Daily
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Defiance is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Financials 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 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 Financials 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 Ultra i.e., ProShares Ultra and Defiance Daily go up and down completely randomly.
Pair Corralation between ProShares Ultra and Defiance Daily
Considering the 90-day investment horizon ProShares Ultra Financials is expected to generate 0.09 times more return on investment than Defiance Daily. However, ProShares Ultra Financials is 11.01 times less risky than Defiance Daily. It trades about 0.16 of its potential returns per unit of risk. Defiance Daily Target is currently generating about -0.01 per unit of risk. If you would invest 4,876 in ProShares Ultra Financials on August 25, 2024 and sell it today you would earn a total of 4,564 from holding ProShares Ultra Financials or generate 93.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 27.2% |
| Values | Daily Returns |
ProShares Ultra Financials vs. Defiance Daily Target
Performance |
| Timeline |
| ProShares Ultra Fina |
| Defiance Daily Target |
ProShares Ultra and Defiance Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares Ultra and Defiance Daily
The main advantage of trading using opposite ProShares Ultra and Defiance Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Ultra 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 Ultra vs. Direxion Daily SP | ProShares Ultra vs. Direxion Daily Semiconductor | ProShares Ultra vs. Direxion Daily Semiconductor |
| Defiance Daily vs. Tidal Trust II | Defiance Daily vs. Tidal Trust II | Defiance Daily vs. First Trust Dorsey | 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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