Correlation Between US Global and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global GO and Direxion Daily Gold, you can compare the effects of market volatilities on US Global 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 US Global with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Direxion Daily.
Diversification Opportunities for US Global and Direxion Daily
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GOAU and Direxion is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding US Global GO and Direxion Daily Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Gold and US Global 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 US Global GO 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 Gold has no effect on the direction of US Global i.e., US Global and Direxion Daily go up and down completely randomly.
Pair Corralation between US Global and Direxion Daily
Given the investment horizon of 90 days US Global is expected to generate 1.72 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, US Global GO is 1.97 times less risky than Direxion Daily. It trades about 0.03 of its potential returns per unit of risk. Direxion Daily Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,774 in Direxion Daily Gold on August 31, 2024 and sell it today you would earn a total of 546.00 from holding Direxion Daily Gold or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
US Global GO vs. Direxion Daily Gold
Performance |
| Timeline |
| US Global GO |
| Direxion Daily Gold |
US Global and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Direxion Daily
The main advantage of trading using opposite US Global and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.| US Global vs. Sprott Gold Miners | US Global vs. Global X Gold | US Global vs. Sprott Junior Gold | US Global vs. Amplify ETF Trust |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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