Correlation Between Direxion Daily and Ishares Russell

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Ishares Russell 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 Ishares Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and Ishares Russell 1000, you can compare the effects of market volatilities on Direxion Daily and Ishares Russell 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 Ishares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Ishares Russell.

Diversification Opportunities for Direxion Daily and Ishares Russell

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Direxion and Ishares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Ishares Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Russell 1000 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 Mid are associated (or correlated) with Ishares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Russell 1000 has no effect on the direction of Direxion Daily i.e., Direxion Daily and Ishares Russell go up and down completely randomly.

Pair Corralation between Direxion Daily and Ishares Russell

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.91 times more return on investment than Ishares Russell. However, Direxion Daily is 3.91 times more volatile than Ishares Russell 1000. It trades about 0.09 of its potential returns per unit of risk. Ishares Russell 1000 is currently generating about 0.15 per unit of risk. If you would invest  3,315  in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of  3,417  from holding Direxion Daily Mid or generate 103.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.66%
ValuesDaily Returns

Direxion Daily Mid  vs.  Ishares Russell 1000

 Performance 
       Timeline  
Direxion Daily Mid 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.
Ishares Russell 1000 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Russell 1000 are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ishares Russell may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Direxion Daily and Ishares Russell Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and Ishares Russell

The main advantage of trading using opposite Direxion Daily and Ishares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Ishares Russell 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 Ishares Russell will offset losses from the drop in Ishares Russell's long position.
The idea behind Direxion Daily Mid and Ishares Russell 1000 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Stocks Directory
Find actively traded stocks across global markets
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges