Correlation Between ProShares VIX and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both ProShares VIX and Direxion Daily 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 VIX and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProShares VIX Short Term and Direxion Daily Mid, you can compare the effects of market volatilities on ProShares VIX and Direxion Daily 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 VIX with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares VIX and Direxion Daily.
Diversification Opportunities for ProShares VIX and Direxion Daily
-0.97 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ProShares and Direxion is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding ProShares VIX Short Term and Direxion Daily Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Mid and ProShares VIX 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 VIX Short Term are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Mid has no effect on the direction of ProShares VIX i.e., ProShares VIX and Direxion Daily go up and down completely randomly.
Pair Corralation between ProShares VIX and Direxion Daily
Given the investment horizon of 90 days ProShares VIX Short Term is expected to under-perform the Direxion Daily. In addition to that, ProShares VIX is 1.15 times more volatile than Direxion Daily Mid. It trades about -0.2 of its total potential returns per unit of risk. Direxion Daily Mid is currently generating about 0.22 per unit of volatility. If you would invest 3,222 in Direxion Daily Mid on April 22, 2025 and sell it today you would earn a total of 1,549 from holding Direxion Daily Mid or generate 48.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProShares VIX Short Term vs. Direxion Daily Mid
Performance |
| Timeline |
| ProShares VIX Short |
| Direxion Daily Mid |
ProShares VIX and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProShares VIX and Direxion Daily
The main advantage of trading using opposite ProShares VIX and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProShares VIX position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| ProShares VIX vs. ProShares VIX Mid Term | ProShares VIX vs. ProShares Short VIX | ProShares VIX vs. ProShares Ultra VIX | ProShares VIX vs. iPath Series B |
| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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