Correlation Between Direxion Daily and ProShares UltraPro

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ProShares UltraPro 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 UltraPro 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 UltraPro QQQ, you can compare the effects of market volatilities on Direxion Daily and ProShares UltraPro 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 UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ProShares UltraPro.

Diversification Opportunities for Direxion Daily and ProShares UltraPro

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Direxion and ProShares is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and ProShares UltraPro QQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro QQQ 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 UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro QQQ has no effect on the direction of Direxion Daily i.e., Direxion Daily and ProShares UltraPro go up and down completely randomly.

Pair Corralation between Direxion Daily and ProShares UltraPro

Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 1.77 times more return on investment than ProShares UltraPro. However, Direxion Daily is 1.77 times more volatile than ProShares UltraPro QQQ. It trades about 0.13 of its potential returns per unit of risk. ProShares UltraPro QQQ is currently generating about 0.07 per unit of risk. If you would invest  6,975  in Direxion Daily Regional on December 29, 2023 and sell it today you would earn a total of  868.00  from holding Direxion Daily Regional or generate 12.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Direxion Daily Regional  vs.  ProShares UltraPro QQQ

 Performance 
       Timeline  
Direxion Daily Regional 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic 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.
ProShares UltraPro QQQ 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro QQQ are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, ProShares UltraPro reported solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily and ProShares UltraPro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and ProShares UltraPro

The main advantage of trading using opposite Direxion Daily and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.
The idea behind Direxion Daily Regional and ProShares UltraPro QQQ 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Commodity Directory
Find actively traded commodities issued by global exchanges
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories