Correlation Between EA Series and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both EA Series and Direxion Daily 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 EA Series and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EA Series Trust and Direxion Daily Regional, you can compare the effects of market volatilities on EA Series and Direxion Daily 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 EA Series with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of EA Series and Direxion Daily.
Diversification Opportunities for EA Series and Direxion Daily
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DRLL and Direxion is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Direxion Daily Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Regional and EA Series 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 EA Series Trust are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Regional has no effect on the direction of EA Series i.e., EA Series and Direxion Daily go up and down completely randomly.
Pair Corralation between EA Series and Direxion Daily
Given the investment horizon of 90 days EA Series is expected to generate 10.3 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, EA Series Trust is 4.97 times less risky than Direxion Daily. It trades about 0.04 of its potential returns per unit of risk. Direxion Daily Regional is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,378 in Direxion Daily Regional on August 28, 2024 and sell it today you would earn a total of 11,060 from holding Direxion Daily Regional or generate 205.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EA Series Trust vs. Direxion Daily Regional
Performance |
| Timeline |
| EA Series Trust |
| Direxion Daily Regional |
EA Series and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EA Series and Direxion Daily
The main advantage of trading using opposite EA Series and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| EA Series vs. EA Series Trust | EA Series vs. EA Series Trust | EA Series vs. Rumble Inc | EA Series vs. EA Series Trust |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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