Correlation Between Direxion Daily and MFUT
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and MFUT 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 MFUT 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 MFUT, you can compare the effects of market volatilities on Direxion Daily and MFUT 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 MFUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and MFUT.
Diversification Opportunities for Direxion Daily and MFUT
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and MFUT is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily META and MFUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFUT 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 MFUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFUT has no effect on the direction of Direxion Daily i.e., Direxion Daily and MFUT go up and down completely randomly.
Pair Corralation between Direxion Daily and MFUT
Given the investment horizon of 90 days Direxion Daily META is expected to generate 5.06 times more return on investment than MFUT. However, Direxion Daily is 5.06 times more volatile than MFUT. It trades about 0.06 of its potential returns per unit of risk. MFUT is currently generating about -0.18 per unit of risk. If you would invest 2,671 in Direxion Daily META on August 29, 2024 and sell it today you would earn a total of 550.00 from holding Direxion Daily META or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Direxion Daily META vs. MFUT
Performance |
| Timeline |
| Direxion Daily META |
| MFUT |
Direxion Daily and MFUT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and MFUT
The main advantage of trading using opposite Direxion Daily and MFUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, MFUT 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 MFUT will offset losses from the drop in MFUT's long position.| Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China | Direxion Daily vs. Tidal Trust II |
| MFUT vs. Freedom Day Dividend | MFUT vs. Franklin Templeton ETF | MFUT vs. iShares MSCI China | MFUT 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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