Correlation Between ProShares Online and Direxion Work

Can any of the company-specific risk be diversified away by investing in both ProShares Online and Direxion Work 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 Online and Direxion Work into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProShares Online Retail and Direxion Work From, you can compare the effects of market volatilities on ProShares Online and Direxion Work 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 Online with a short position of Direxion Work. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Online and Direxion Work.

Diversification Opportunities for ProShares Online and Direxion Work

0.89

Correlation Coefficient

ProShares Online  Direxion Work

Very poor diversification

The 3 months correlation between ProShares and Direxion is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Online Retail and Direxion Work From in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Work From and ProShares Online 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 Online Retail are associated (or correlated) with Direxion Work. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Work From has no effect on the direction of ProShares Online i.e., ProShares Online and Direxion Work go up and down completely randomly.

Pair Corralation between ProShares Online and Direxion Work

Given the investment horizon of 90 days ProShares Online Retail is expected to generate 1.06 times more return on investment than Direxion Work. However, ProShares Online is 1.06 times more volatile than Direxion Work From. It trades about -0.04 of its potential returns per unit of risk. Direxion Work From is currently generating about -0.08 per unit of risk. If you would invest  4,575  in ProShares Online Retail on December 21, 2024 and sell it today you would lose (191.00) from holding ProShares Online Retail or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

ProShares Online Retail  vs.  Direxion Work From

ProShares Online Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Online Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, ProShares Online is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Direxion Work From

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Work From has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with ProShares Online and Direxion Work

The main advantage of trading using opposite ProShares Online and Direxion Work positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares Online position performs unexpectedly, Direxion Work 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 Work will offset losses from the drop in Direxion Work's long position.

The idea behind ProShares Online Retail and Direxion Work From 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.