(GASL) and (UGAZ) are absolutely different, but related;
(UGAZ) tracks " S&P GSCIŽ Natural Gas Index ER" through futures. Unleveraged alternative is (UNG).
(GASL) tracks "ISE-Revere Natural Gas Index (FUM)" which consists of weighted stock combo though many different ways. Unleveraged alternative is (FCG).
One major difference between those two is the decay.
It's hard to tell how much decay has GASL experienced on a short term basis - but Direxion said it's 3-year decay is 16.74%. However, I looked at the 4-year chart and found that in June, 2014 it has underperformed by ~50% its underlying.
UGAZ since inception date, which is 2 years 9 months away (2/7/2012), underperformed by ~57%.
Anyways, it seems that because of the structure and just based on the numbers, UGAZ decays more. Correlation between the two is 0.54...which is nothing meaningful IMO.
As energy sector and possibly oil rebounds, gas companies (FCG, GASL) will rebound (correlation of 0.9). I am not speculating on the oil prices, opec and geopolitics - but it seems that the last gap was an exhaustion one, similar to what GDX experienced before rebounding.
As for natural gas itself (UNG, UGAZ) - it's range-bound/seasonal/mean-reverting... which could spike up with the storage amount below average under bad circumstances...but who knows?
That's why I said that the pair UGAZ/DGAZ is so good for double short....it's not trending for long....so both decay....while when leveraged instrument trades in trend...their "leverage" actually INCREASES...just look at 2-year SPY vs UPRO... with SPY ~52.5%.... UPRO at over 220%....that's not 3X.
So overall... UGAZ has lower odds than GASL....based on the stats and some fundamentals... but who knows?
Thanx Gus. I've been saying utilities were the new thing for months Keep up the good research.
Just goes to show you that when you have several goofs maligning you, to disregard them. At first it will feel lonely
at the top then you will feel a comfort knowing you were on to something that the rest were not.
There will always be crippled minds that will cast stones.
Utilities and other low-beta instruments are the long-term out-performers, sometimes including CAGR (as utilities are) and sometimes not. However, their other superior qualities, such as lower volatility and Max DD, allow them to outperform SPY by a large margin, when risk-adjusted risk of SPY through bigger position size.
Anyways, today was wild with consecutive losses in natural gas / energy and a magnificent gold miners rebound...
Currently short volatility, but with no thoughts of holding overnight...
Certainly got too greedy and ignorant trying to catch the falling knife in energy...
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