Correlation Between Direxion Daily and MicroSectors Travel
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and MicroSectors Travel 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 MicroSectors Travel 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 MicroSectors Travel 3X, you can compare the effects of market volatilities on Direxion Daily and MicroSectors Travel 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 MicroSectors Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and MicroSectors Travel.
Diversification Opportunities for Direxion Daily and MicroSectors Travel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and MicroSectors is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and MicroSectors Travel 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors Travel 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 MicroSectors Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors Travel has no effect on the direction of Direxion Daily i.e., Direxion Daily and MicroSectors Travel go up and down completely randomly.
Pair Corralation between Direxion Daily and MicroSectors Travel
Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the MicroSectors Travel. In addition to that, Direxion Daily is 2.15 times more volatile than MicroSectors Travel 3X. It trades about -0.16 of its total potential returns per unit of risk. MicroSectors Travel 3X is currently generating about 0.1 per unit of volatility. If you would invest 6,044 in MicroSectors Travel 3X on September 13, 2024 and sell it today you would earn a total of 310.00 from holding MicroSectors Travel 3X or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. MicroSectors Travel 3X
Performance |
| Timeline |
| Direxion Daily SP |
| MicroSectors Travel |
Direxion Daily and MicroSectors Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and MicroSectors Travel
The main advantage of trading using opposite Direxion Daily and MicroSectors Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, MicroSectors Travel 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 MicroSectors Travel will offset losses from the drop in MicroSectors Travel's long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily Small |
| MicroSectors Travel vs. MicroSectors Travel 3X | MicroSectors Travel vs. MicroSectors Gold Miners | MicroSectors Travel vs. Direxion Daily Travel | MicroSectors Travel vs. MicroSectors Solactive FANG |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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