Correlation Between Direxion Daily and High Yield
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and High Yield 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 High Yield 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 High Yield Fund, you can compare the effects of market volatilities on Direxion Daily and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and High Yield.
Diversification Opportunities for Direxion Daily and High Yield
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and High is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Direxion Daily i.e., Direxion Daily and High Yield go up and down completely randomly.
Pair Corralation between Direxion Daily and High Yield
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 11.21 times more return on investment than High Yield. However, Direxion Daily is 11.21 times more volatile than High Yield Fund. It trades about 0.05 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.12 per unit of risk. If you would invest 3,781 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,951 from holding Direxion Daily Mid or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. High Yield Fund
Performance |
| Timeline |
| Direxion Daily Mid |
| High Yield Fund |
Direxion Daily and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and High Yield
The main advantage of trading using opposite Direxion Daily and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
| High Yield vs. Strategic Asset Management | High Yield vs. Strategic Asset Management | High Yield vs. Strategic Asset Management | High Yield vs. Strategic Asset Management |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance |