Correlation Between ProShares UltraShort and Direxion All
Can any of the company-specific risk be diversified away by investing in both ProShares UltraShort and Direxion All 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 UltraShort and Direxion All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares UltraShort Yen and Direxion All Cap, you can compare the effects of market volatilities on ProShares UltraShort and Direxion All 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 UltraShort with a short position of Direxion All. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares UltraShort and Direxion All.
Diversification Opportunities for ProShares UltraShort and Direxion All
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ProShares and Direxion is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ProShares UltraShort Yen and Direxion All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion All Cap and ProShares UltraShort 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 UltraShort Yen are associated (or correlated) with Direxion All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion All Cap has no effect on the direction of ProShares UltraShort i.e., ProShares UltraShort and Direxion All go up and down completely randomly.
Pair Corralation between ProShares UltraShort and Direxion All
Considering the 90-day investment horizon ProShares UltraShort Yen is expected to generate 1.98 times more return on investment than Direxion All. However, ProShares UltraShort is 1.98 times more volatile than Direxion All Cap. It trades about 0.07 of its potential returns per unit of risk. Direxion All Cap is currently generating about 0.1 per unit of risk. If you would invest 3,127 in ProShares UltraShort Yen on August 31, 2024 and sell it today you would earn a total of 1,134 from holding ProShares UltraShort Yen or generate 36.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 52.41% |
| Values | Daily Returns |
ProShares UltraShort Yen vs. Direxion All Cap
Performance |
| Timeline |
| ProShares UltraShort Yen |
| Direxion All Cap |
ProShares UltraShort and Direxion All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares UltraShort and Direxion All
The main advantage of trading using opposite ProShares UltraShort and Direxion All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares UltraShort position performs unexpectedly, Direxion All 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 All will offset losses from the drop in Direxion All's long position.| ProShares UltraShort vs. ProShares UltraShort Euro | ProShares UltraShort vs. ProShares Ultra Yen | ProShares UltraShort vs. ProShares Ultra Euro | ProShares UltraShort vs. ProShares UltraShort MSCI |
| Direxion All vs. EA Series Trust | Direxion All vs. Northern Lights | Direxion All vs. Northern Lights | Direxion All vs. Northern Lights |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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