Correlation Between Direxion Daily and Global X
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Global X 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 Global X 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 Global X MLP, you can compare the effects of market volatilities on Direxion Daily and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Global X.
Diversification Opportunities for Direxion Daily and Global X
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Global X MLP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MLP 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MLP has no effect on the direction of Direxion Daily i.e., Direxion Daily and Global X go up and down completely randomly.
Pair Corralation between Direxion Daily and Global X
Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 7.43 times more return on investment than Global X. However, Direxion Daily is 7.43 times more volatile than Global X MLP. It trades about 0.07 of its potential returns per unit of risk. Global X MLP is currently generating about 0.1 per unit of risk. If you would invest 5,799 in Direxion Daily Regional on September 12, 2024 and sell it today you would earn a total of 8,265 from holding Direxion Daily Regional or generate 142.52% 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. Global X MLP
Performance |
| Timeline |
| Direxion Daily Regional |
| Global X MLP |
Direxion Daily and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Global X
The main advantage of trading using opposite Direxion Daily and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. ProShares UltraPro SP500 |
| Global X vs. First Trust North | Global X vs. Global X MLP | Global X vs. Tortoise North American | Global X vs. InfraCap MLP ETF |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |