Correlation Between Direxion Daily and Avantis International
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Avantis International 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 Daily and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Regional and Avantis International Large, you can compare the effects of market volatilities on Direxion Daily and Avantis International 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 Daily with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Avantis International.
Diversification Opportunities for Direxion Daily and Avantis International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Avantis is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Avantis International Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Direxion Daily 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 Daily Regional are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Direxion Daily i.e., Direxion Daily and Avantis International go up and down completely randomly.
Pair Corralation between Direxion Daily and Avantis International
Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 7.21 times more return on investment than Avantis International. However, Direxion Daily is 7.21 times more volatile than Avantis International Large. It trades about 0.02 of its potential returns per unit of risk. Avantis International Large is currently generating about 0.05 per unit of risk. If you would invest 22,263 in Direxion Daily Regional on September 3, 2024 and sell it today you would lose (6,619) from holding Direxion Daily Regional or give up 29.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Regional vs. Avantis International Large
Performance |
| Timeline |
| Direxion Daily Regional |
| Avantis International |
Direxion Daily and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Avantis International
The main advantage of trading using opposite Direxion Daily and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Avantis International 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 Avantis International will offset losses from the drop in Avantis International's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. Direxion Daily Technology |
| Avantis International vs. American Century ETF | Avantis International vs. Avantis Emerging Markets | Avantis International vs. Avantis International Small | Avantis International vs. Avantis Emerging Markets |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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