Correlation Between Direxion Daily and Themes Global
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Themes Global 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 Themes Global 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 Themes Global Systemically, you can compare the effects of market volatilities on Direxion Daily and Themes Global 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 Themes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Themes Global.
Diversification Opportunities for Direxion Daily and Themes Global
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Themes is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Themes Global Systemically in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Global System 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 Themes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Global System has no effect on the direction of Direxion Daily i.e., Direxion Daily and Themes Global go up and down completely randomly.
Pair Corralation between Direxion Daily and Themes Global
Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 11.34 times more return on investment than Themes Global. However, Direxion Daily is 11.34 times more volatile than Themes Global Systemically. It trades about 0.22 of its potential returns per unit of risk. Themes Global Systemically is currently generating about 0.19 per unit of risk. If you would invest 10,482 in Direxion Daily Regional on September 4, 2024 and sell it today you would earn a total of 4,714 from holding Direxion Daily Regional or generate 44.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Regional vs. Themes Global Systemically
Performance |
| Timeline |
| Direxion Daily Regional |
| Themes Global System |
Direxion Daily and Themes Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Themes Global
The main advantage of trading using opposite Direxion Daily and Themes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Themes Global 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 Themes Global will offset losses from the drop in Themes Global's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. MicroSectors FANG Index | Direxion Daily vs. ProShares Ultra Financials |
| Themes Global vs. Ultimus Managers Trust | Themes Global vs. American Beacon Select | Themes Global vs. Direxion Daily Regional | Themes Global 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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