Correlation Between Direxion Daily and ProShares UltraShort

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares UltraShort 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 Direxion Daily and ProShares UltraShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Regional and ProShares UltraShort SP500, you can compare the effects of market volatilities on Direxion Daily and ProShares UltraShort 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 Direxion Daily with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares UltraShort.

Diversification Opportunities for Direxion Daily and ProShares UltraShort

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Direxion and ProShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort and Direxion Daily 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 Direxion Daily Regional are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Direxion Daily and ProShares UltraShort

Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 3.88 times more return on investment than ProShares UltraShort. However, Direxion Daily is 3.88 times more volatile than ProShares UltraShort SP500. It trades about 0.07 of its potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about -0.15 per unit of risk. If you would invest  5,980  in Direxion Daily Regional on February 21, 2024 and sell it today you would earn a total of  1,789  from holding Direxion Daily Regional or generate 29.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Direxion Daily Regional  vs.  ProShares UltraShort SP500

 Performance 
       Timeline  
Direxion Daily Regional 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Regional are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.
ProShares UltraShort 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ProShares UltraShort SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Direxion Daily and ProShares UltraShort Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and ProShares UltraShort

The main advantage of trading using opposite Direxion Daily and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.
The idea behind Direxion Daily Regional and ProShares UltraShort SP500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume