Correlation Between Direxion Daily and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and SGI Enhanced 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 SGI Enhanced 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 SGI Enhanced Core, you can compare the effects of market volatilities on Direxion Daily and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and SGI Enhanced.
Diversification Opportunities for Direxion Daily and SGI Enhanced
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and SGI is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily META and SGI Enhanced Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Core 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Core has no effect on the direction of Direxion Daily i.e., Direxion Daily and SGI Enhanced go up and down completely randomly.
Pair Corralation between Direxion Daily and SGI Enhanced
Given the investment horizon of 90 days Direxion Daily META is expected to under-perform the SGI Enhanced. In addition to that, Direxion Daily is 21.11 times more volatile than SGI Enhanced Core. It trades about -0.05 of its total potential returns per unit of risk. SGI Enhanced Core is currently generating about 0.34 per unit of volatility. If you would invest 2,470 in SGI Enhanced Core on August 26, 2024 and sell it today you would earn a total of 156.00 from holding SGI Enhanced Core or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 59.31% |
| Values | Daily Returns |
Direxion Daily META vs. SGI Enhanced Core
Performance |
| Timeline |
| Direxion Daily META |
| SGI Enhanced Core |
Direxion Daily and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and SGI Enhanced
The main advantage of trading using opposite Direxion Daily and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced's long position.| Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Tidal Trust II | Direxion Daily vs. First Trust Dorsey | Direxion Daily vs. Direxion Daily META |
| SGI Enhanced vs. Tidal Trust II | SGI Enhanced vs. Tidal Trust II | SGI Enhanced vs. First Trust Dorsey | SGI Enhanced vs. Direxion Daily META |
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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