Correlation Between Franklin Templeton and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Franklin Templeton 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 Franklin Templeton and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Templeton ETF and Direxion Daily META, you can compare the effects of market volatilities on Franklin Templeton 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 Franklin Templeton with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Templeton and Direxion Daily.
Diversification Opportunities for Franklin Templeton and Direxion Daily
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franklin and Direxion is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Templeton ETF and Direxion Daily META in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily META and Franklin Templeton 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 Franklin Templeton 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 META has no effect on the direction of Franklin Templeton i.e., Franklin Templeton and Direxion Daily go up and down completely randomly.
Pair Corralation between Franklin Templeton and Direxion Daily
Given the investment horizon of 90 days Franklin Templeton is expected to generate 5.59 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Franklin Templeton ETF is 3.38 times less risky than Direxion Daily. It trades about 0.04 of its potential returns per unit of risk. Direxion Daily META is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,671 in Direxion Daily META on September 1, 2024 and sell it today you would earn a total of 608.00 from holding Direxion Daily META or generate 22.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Franklin Templeton ETF vs. Direxion Daily META
Performance |
| Timeline |
| Franklin Templeton ETF |
| Direxion Daily META |
Franklin Templeton and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Templeton and Direxion Daily
The main advantage of trading using opposite Franklin Templeton and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Templeton 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.| Franklin Templeton vs. Xtrackers MSCI Emerging | Franklin Templeton vs. FlexShares Morningstar Emerging | Franklin Templeton vs. First Trust Emerging |
| Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Direxion Daily META | Direxion Daily vs. Tidal Trust II |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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