Correlation Between Dimensional International and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Dimensional International and Direxion Shares 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 Dimensional International and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and Direxion Shares ETF, you can compare the effects of market volatilities on Dimensional International and Direxion Shares 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 Dimensional International with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Direxion Shares.
Diversification Opportunities for Dimensional International and Direxion Shares
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dimensional and Direxion is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and Dimensional International 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 Dimensional International High are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Dimensional International i.e., Dimensional International and Direxion Shares go up and down completely randomly.
Pair Corralation between Dimensional International and Direxion Shares
Given the investment horizon of 90 days Dimensional International High is expected to generate 0.53 times more return on investment than Direxion Shares. However, Dimensional International High is 1.88 times less risky than Direxion Shares. It trades about 0.1 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.32 per unit of risk. If you would invest 2,615 in Dimensional International High on September 12, 2024 and sell it today you would earn a total of 35.00 from holding Dimensional International High or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International High vs. Direxion Shares ETF
Performance |
| Timeline |
| Dimensional International |
| Direxion Shares ETF |
Dimensional International and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and Direxion Shares
The main advantage of trading using opposite Dimensional International and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| Dimensional International vs. iShares MSCI Intl | Dimensional International vs. iShares MSCI Intl | Dimensional International vs. iShares Currency Hedged | Dimensional International vs. iShares Edge MSCI |
| Direxion Shares vs. FT Vest Equity | Direxion Shares vs. Northern Lights | Direxion Shares vs. Dimensional International High | Direxion Shares vs. JPMorgan Fundamental Data |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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