Correlation Between Direxion Daily and Global Diversified
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Global Diversified 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 Global Diversified 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 Global Diversified Income, you can compare the effects of market volatilities on Direxion Daily and Global Diversified 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 Global Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Global Diversified.
Diversification Opportunities for Direxion Daily and Global Diversified
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Global Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Diversified Income 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 Global Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Diversified Income has no effect on the direction of Direxion Daily i.e., Direxion Daily and Global Diversified go up and down completely randomly.
Pair Corralation between Direxion Daily and Global Diversified
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 12.94 times more return on investment than Global Diversified. However, Direxion Daily is 12.94 times more volatile than Global Diversified Income. It trades about 0.05 of its potential returns per unit of risk. Global Diversified Income is currently generating about 0.1 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 Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Direxion Daily Mid vs. Global Diversified Income
Performance |
| Timeline |
| Direxion Daily Mid |
| Global Diversified Income |
Direxion Daily and Global Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Global Diversified
The main advantage of trading using opposite Direxion Daily and Global Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Global Diversified 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 Global Diversified will offset losses from the drop in Global Diversified'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 |
| Global Diversified vs. Columbia Real Estate | Global Diversified vs. Commonwealth Real Estate | Global Diversified vs. Amg Managers Centersquare | Global Diversified vs. Pender Real Estate |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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