Correlation Between MFUT and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both MFUT 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 MFUT and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFUT and Direxion Daily META, you can compare the effects of market volatilities on MFUT 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 MFUT with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFUT and Direxion Daily.
Diversification Opportunities for MFUT and Direxion Daily
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MFUT and Direxion is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MFUT and Direxion Daily META in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily META and MFUT 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 MFUT 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 META has no effect on the direction of MFUT i.e., MFUT and Direxion Daily go up and down completely randomly.
Pair Corralation between MFUT and Direxion Daily
Given the investment horizon of 90 days MFUT is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, MFUT is 5.06 times less risky than Direxion Daily. The etf trades about -0.18 of its potential returns per unit of risk. The Direxion Daily META is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
MFUT vs. Direxion Daily META
Performance |
| Timeline |
| MFUT |
| Direxion Daily META |
MFUT and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFUT and Direxion Daily
The main advantage of trading using opposite MFUT and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFUT 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.| MFUT vs. Freedom Day Dividend | MFUT vs. Franklin Templeton ETF | MFUT vs. iShares MSCI China | MFUT vs. Tidal Trust II |
| Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China | Direxion Daily 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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