Correlation Between Direxion Daily and Direxion
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Direxion 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 Direxion 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 Direxion, you can compare the effects of market volatilities on Direxion Daily and Direxion 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 Direxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Direxion.
Diversification Opportunities for Direxion Daily and Direxion
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Direxion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Direxion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion 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 Direxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion has no effect on the direction of Direxion Daily i.e., Direxion Daily and Direxion go up and down completely randomly.
Pair Corralation between Direxion Daily and Direxion
If you would invest 6,209 in Direxion Daily Regional on September 3, 2024 and sell it today you would earn a total of 9,435 from holding Direxion Daily Regional or generate 151.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.8% |
| Values | Daily Returns |
Direxion Daily Regional vs. Direxion
Performance |
| Timeline |
| Direxion Daily Regional |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Direxion Daily and Direxion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Direxion
The main advantage of trading using opposite Direxion Daily and Direxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Direxion 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 will offset losses from the drop in Direxion'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 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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