Here's a look at the DBA/XLE and DBA/DIG pairs. We're looking at the variation in various trading metrics when using a single x ETF (XLE) versus a 2x ETF (DIG) against the DBA agriculture ETF, which reflects a basket of sugar, soybean,corn and wheat futures.
Two arguments favor using the DBA/DIG pair from my perspective.
#1 . . the lookback period or cycle for the DIG pair is 9 days. . .the XLE pair is 27 days. That involves considerably more total exposure for the XLE pair (time in the market) and fewer cycles (trades), which in turn impact. .
#2 . . the hypothetical P&L. For the XLE pair this is 54%, while the DIG pair yields 84%.
Between these two scenarios the more volatile of the energy ETFs appears to deliver the better trading model. XLE is currently trading about 17M shares a day, while DIG, which was averaging around 11M shares a day in July has now dropped to 3.5M a day.
Both DBA and DIG option open interest and daily volume are very thin and the option bid/ask spreads are often .25 to .40, further making them unattractive for pairs option spreads. Cash only please for these pairs.