Correlation Between Direxion Daily and FundX Aggressive
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and FundX Aggressive 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 FundX Aggressive 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 FundX Aggressive ETF, you can compare the effects of market volatilities on Direxion Daily and FundX Aggressive 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 FundX Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and FundX Aggressive.
Diversification Opportunities for Direxion Daily and FundX Aggressive
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and FundX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and FundX Aggressive ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Aggressive ETF 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 FundX Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Aggressive ETF has no effect on the direction of Direxion Daily i.e., Direxion Daily and FundX Aggressive go up and down completely randomly.
Pair Corralation between Direxion Daily and FundX Aggressive
Given the investment horizon of 90 days Direxion Daily Regional is expected to under-perform the FundX Aggressive. In addition to that, Direxion Daily is 4.25 times more volatile than FundX Aggressive ETF. It trades about -0.14 of its total potential returns per unit of risk. FundX Aggressive ETF is currently generating about -0.24 per unit of volatility. If you would invest 7,441 in FundX Aggressive ETF on December 1, 2024 and sell it today you would lose (364.00) from holding FundX Aggressive ETF or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Direxion Daily Regional vs. FundX Aggressive ETF
Performance |
| Timeline |
| Direxion Daily Regional |
| FundX Aggressive ETF |
Direxion Daily and FundX Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and FundX Aggressive
The main advantage of trading using opposite Direxion Daily and FundX Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, FundX Aggressive 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 FundX Aggressive will offset losses from the drop in FundX Aggressive's long position.| Direxion Daily vs. Direxion Daily Homebuilders | Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Aerospace |
| FundX Aggressive vs. Strategy Shares | FundX Aggressive vs. Freedom Day Dividend | FundX Aggressive vs. Franklin Templeton ETF | FundX Aggressive vs. iShares MSCI China |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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