Correlation Between Direxion Shares and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Direxion Shares 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 Direxion Shares and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Shares ETF and Direxion Daily SP, you can compare the effects of market volatilities on Direxion Shares 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 Direxion Shares with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and Direxion Daily.
Diversification Opportunities for Direxion Shares and Direxion Daily
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Direxion is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and Direxion Shares 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 Direxion Shares ETF 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 SP has no effect on the direction of Direxion Shares i.e., Direxion Shares and Direxion Daily go up and down completely randomly.
Pair Corralation between Direxion Shares and Direxion Daily
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 0.54 times more return on investment than Direxion Daily. However, Direxion Shares ETF is 1.85 times less risky than Direxion Daily. It trades about 0.18 of its potential returns per unit of risk. Direxion Daily SP is currently generating about 0.07 per unit of risk. If you would invest 3,166 in Direxion Shares ETF on August 27, 2024 and sell it today you would earn a total of 330.00 from holding Direxion Shares ETF or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Shares ETF vs. Direxion Daily SP
Performance |
| Timeline |
| Direxion Shares ETF |
| Direxion Daily SP |
Direxion Shares and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and Direxion Daily
The main advantage of trading using opposite Direxion Shares and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares 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.| Direxion Shares vs. Direxion Daily SP | Direxion Shares vs. Direxion Daily Semiconductor | Direxion Shares vs. Direxion Daily Semiconductor |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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