Assuming ... the Underlying Index goes Up %1 then Down 1%. Then the 3X Fund goes Up / Down 3% every two days. That creates 0.09% Shrinkage every two days. Which is a Gain if SHORT. Compounded for 100 of 2 Day Round Trips is about 10% Gain per year.
If you can find a 3X Fund that swings more than +/-3% per day then your Returns increase accordringly.
Also, would you need to balance the two funds every night to remain Market Neutral?
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