Correlation Between Direxion Daily and ETF Series
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ETF Series 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 ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily META and ETF Series Solutions, you can compare the effects of market volatilities on Direxion Daily and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ETF Series.
Diversification Opportunities for Direxion Daily and ETF Series
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and ETF is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily META and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 META are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Direxion Daily i.e., Direxion Daily and ETF Series go up and down completely randomly.
Pair Corralation between Direxion Daily and ETF Series
Given the investment horizon of 90 days Direxion Daily META is expected to generate 10.69 times more return on investment than ETF Series. However, Direxion Daily is 10.69 times more volatile than ETF Series Solutions. It trades about 0.12 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.09 per unit of risk. If you would invest 1,978 in Direxion Daily META on August 30, 2024 and sell it today you would earn a total of 86.00 from holding Direxion Daily META or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily META vs. ETF Series Solutions
Performance |
| Timeline |
| Direxion Daily META |
| ETF Series Solutions |
Direxion Daily and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ETF Series
The main advantage of trading using opposite Direxion Daily and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Direxion Daily vs. AXS TSLA Bear | Direxion Daily vs. ProShares Trust | Direxion Daily vs. ProShares UltraShort Bloomberg |
| ETF Series vs. Valued Advisers Trust | ETF Series vs. Columbia Diversified Fixed | ETF Series vs. Principal Exchange Traded Funds | ETF Series vs. Doubleline Etf Trust |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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