Correlation Between Direxion Daily and Tuttle Capital
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Tuttle Capital 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 Tuttle Capital 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 Tuttle Capital Short, you can compare the effects of market volatilities on Direxion Daily and Tuttle Capital 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 Tuttle Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Tuttle Capital.
Diversification Opportunities for Direxion Daily and Tuttle Capital
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Tuttle is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and Tuttle Capital Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuttle Capital Short 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 Tuttle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuttle Capital Short has no effect on the direction of Direxion Daily i.e., Direxion Daily and Tuttle Capital go up and down completely randomly.
Pair Corralation between Direxion Daily and Tuttle Capital
Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the Tuttle Capital. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily SP is 4.08 times less risky than Tuttle Capital. The etf trades about -0.07 of its potential returns per unit of risk. The Tuttle Capital Short is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,058 in Tuttle Capital Short on September 5, 2024 and sell it today you would earn a total of 1,660 from holding Tuttle Capital Short or generate 54.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. Tuttle Capital Short
Performance |
| Timeline |
| Direxion Daily SP |
| Tuttle Capital Short |
Direxion Daily and Tuttle Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Tuttle Capital
The main advantage of trading using opposite Direxion Daily and Tuttle Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Tuttle Capital 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 Tuttle Capital will offset losses from the drop in Tuttle Capital's long position.| Direxion Daily vs. ProShares Ultra MSCI | Direxion Daily vs. ProShares UltraShort MSCI | Direxion Daily vs. Direxion Daily MSCI |
| Tuttle Capital vs. ProShares Ultra MSCI | Tuttle Capital vs. ProShares UltraShort MSCI | Tuttle Capital vs. Direxion Daily MSCI |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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