Correlation Between Direxion Daily and Pacer Solactive
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Pacer Solactive 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 Pacer Solactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Industrials and Pacer Solactive Whitney, you can compare the effects of market volatilities on Direxion Daily and Pacer Solactive 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 Pacer Solactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Pacer Solactive.
Diversification Opportunities for Direxion Daily and Pacer Solactive
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Pacer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Industrials and Pacer Solactive Whitney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Solactive Whitney 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 Industrials are associated (or correlated) with Pacer Solactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Solactive Whitney has no effect on the direction of Direxion Daily i.e., Direxion Daily and Pacer Solactive go up and down completely randomly.
Pair Corralation between Direxion Daily and Pacer Solactive
Given the investment horizon of 90 days Direxion Daily Industrials is expected to generate 3.27 times more return on investment than Pacer Solactive. However, Direxion Daily is 3.27 times more volatile than Pacer Solactive Whitney. It trades about 0.3 of its potential returns per unit of risk. Pacer Solactive Whitney is currently generating about 0.24 per unit of risk. If you would invest 5,435 in Direxion Daily Industrials on November 3, 2024 and sell it today you would earn a total of 970.00 from holding Direxion Daily Industrials or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Industrials vs. Pacer Solactive Whitney
Performance |
| Timeline |
| Direxion Daily Indus |
| Pacer Solactive Whitney |
Direxion Daily and Pacer Solactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Pacer Solactive
The main advantage of trading using opposite Direxion Daily and Pacer Solactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Pacer Solactive 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 Pacer Solactive will offset losses from the drop in Pacer Solactive's long position.| Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Utilities | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Retail |
| Pacer Solactive vs. Ultimus Managers Trust | Pacer Solactive vs. American Beacon Select | Pacer Solactive vs. First Trust Indxx | Pacer Solactive 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |