Correlation Between Direxion Daily and IShares
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and IShares 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 IShares 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 IShares, you can compare the effects of market volatilities on Direxion Daily and IShares 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 IShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and IShares.
Diversification Opportunities for Direxion Daily and IShares
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Direxion Daily i.e., Direxion Daily and IShares go up and down completely randomly.
Pair Corralation between Direxion Daily and IShares
Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 7.13 times more return on investment than IShares. However, Direxion Daily is 7.13 times more volatile than IShares. It trades about 0.02 of its potential returns per unit of risk. IShares is currently generating about 0.04 per unit of risk. If you would invest 23,509 in Direxion Daily Regional on September 3, 2024 and sell it today you would lose (7,865) from holding Direxion Daily Regional or give up 33.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 27.79% |
| Values | Daily Returns |
Direxion Daily Regional vs. IShares
Performance |
| Timeline |
| Direxion Daily Regional |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Direxion Daily and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and IShares
The main advantage of trading using opposite Direxion Daily and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, IShares 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 IShares will offset losses from the drop in IShares' 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 |
| IShares vs. Vanguard Mid Cap Value | IShares vs. SPDR SP Dividend | IShares vs. SCOR PK | IShares vs. HUMANA INC |
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
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |