Correlation Between IShares Core and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both IShares Core and Direxion Shares 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 IShares Core and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Direxion Shares ETF, you can compare the effects of market volatilities on IShares Core and Direxion Shares 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 IShares Core with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Direxion Shares.
Diversification Opportunities for IShares Core and Direxion Shares
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and Direxion is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and IShares Core 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 iShares Core SP are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of IShares Core i.e., IShares Core and Direxion Shares go up and down completely randomly.
Pair Corralation between IShares Core and Direxion Shares
Considering the 90-day investment horizon iShares Core SP is expected to generate 0.25 times more return on investment than Direxion Shares. However, iShares Core SP is 3.99 times less risky than Direxion Shares. It trades about 0.18 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.08 per unit of risk. If you would invest 58,868 in iShares Core SP on November 1, 2024 and sell it today you would earn a total of 1,808 from holding iShares Core SP or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Direxion Shares ETF
Performance |
| Timeline |
| iShares Core SP |
| Direxion Shares ETF |
IShares Core and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Direxion Shares
The main advantage of trading using opposite IShares Core and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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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