Correlation Between Direxion and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Direxion 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 Direxion and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion and Direxion Daily Cloud, you can compare the effects of market volatilities on Direxion 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 Direxion with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion and Direxion Daily.
Diversification Opportunities for Direxion and Direxion Daily
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Direxion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion and Direxion Daily Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Cloud and Direxion 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 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 Cloud has no effect on the direction of Direxion i.e., Direxion and Direxion Daily go up and down completely randomly.
Pair Corralation between Direxion and Direxion Daily
If you would invest 1,422 in Direxion Daily Cloud on November 4, 2024 and sell it today you would earn a total of 151.00 from holding Direxion Daily Cloud or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Direxion vs. Direxion Daily Cloud
Performance |
| Timeline |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Direxion Daily Cloud |
Direxion and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion and Direxion Daily
The main advantage of trading using opposite Direxion and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion 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.| Direxion vs. Direxion Daily Cloud | Direxion vs. Direxion Daily Travel | Direxion vs. Direxion Daily Select |
| Direxion Daily vs. Direxion Daily Travel | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Dow | Direxion Daily vs. Direxion Daily Industrials |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |