Correlation Between Direxion Daily and GraniteShares
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and GraniteShares 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 GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP and GraniteShares 2x Long, you can compare the effects of market volatilities on Direxion Daily and GraniteShares 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 GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and GraniteShares.
Diversification Opportunities for Direxion Daily and GraniteShares
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and GraniteShares is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and GraniteShares 2x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 2x Long 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 SP are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 2x Long has no effect on the direction of Direxion Daily i.e., Direxion Daily and GraniteShares go up and down completely randomly.
Pair Corralation between Direxion Daily and GraniteShares
Given the investment horizon of 90 days Direxion Daily SP is expected to generate 0.53 times more return on investment than GraniteShares. However, Direxion Daily SP is 1.89 times less risky than GraniteShares. It trades about -0.09 of its potential returns per unit of risk. GraniteShares 2x Long is currently generating about -0.1 per unit of risk. If you would invest 3,175 in Direxion Daily SP on September 13, 2024 and sell it today you would lose (187.00) from holding Direxion Daily SP or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. GraniteShares 2x Long
Performance |
| Timeline |
| Direxion Daily SP |
| GraniteShares 2x Long |
Direxion Daily and GraniteShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and GraniteShares
The main advantage of trading using opposite Direxion Daily and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, GraniteShares 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 GraniteShares will offset losses from the drop in GraniteShares' long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Energy | Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Junior |
| GraniteShares vs. ProShares Ultra SP500 | GraniteShares vs. Direxion Daily SP | GraniteShares vs. Direxion Daily SP | GraniteShares vs. MicroSectors FANG Index |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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