Correlation Between ProShares Ultra and Direxion Auspice

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

By analyzing existing cross correlation between ProShares Ultra Technology and Direxion Auspice Broad, you can compare the effects of market volatilities on ProShares Ultra and Direxion Auspice 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 Direxion Auspice. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Ultra and Direxion Auspice.

Diversification Opportunities for ProShares Ultra and Direxion Auspice

-0.32

Correlation Coefficient

ProShares Ultra  Direxion Auspice

Very good diversification

The 3 months correlation between ProShares and Direxion is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Ultra Technology and Direxion Auspice Broad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Auspice Broad 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 Technology are associated (or correlated) with Direxion Auspice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Auspice Broad has no effect on the direction of ProShares Ultra i.e., ProShares Ultra and Direxion Auspice go up and down completely randomly.

Pair Corralation between ProShares Ultra and Direxion Auspice

Considering the 90-day investment horizon ProShares Ultra Technology is expected to under-perform the Direxion Auspice. In addition to that, ProShares Ultra is 6.35 times more volatile than Direxion Auspice Broad. It trades about -0.12 of its total potential returns per unit of risk. Direxion Auspice Broad is currently generating about 0.13 per unit of volatility. If you would invest  2,799  in Direxion Auspice Broad on December 30, 2024 and sell it today you would earn a total of  122.00  from holding Direxion Auspice Broad or generate 4.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ProShares Ultra Technology  vs.  Direxion Auspice Broad

ProShares Ultra Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Direxion Auspice Broad

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Auspice Broad are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Direxion Auspice is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ProShares Ultra and Direxion Auspice

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

The idea behind ProShares Ultra Technology and Direxion Auspice Broad 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 CEOs Directory module to screen CEOs from public companies around the world.