Correlation Between Direxion Daily and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on Direxion Daily and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Virtus Kar.
Diversification Opportunities for Direxion Daily and Virtus Kar
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and VIRTUS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Direxion Daily i.e., Direxion Daily and Virtus Kar go up and down completely randomly.
Pair Corralation between Direxion Daily and Virtus Kar
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 2.57 times more return on investment than Virtus Kar. However, Direxion Daily is 2.57 times more volatile than Virtus Kar Small Cap. It trades about 0.09 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.08 per unit of risk. If you would invest 3,822 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,910 from holding Direxion Daily Mid or generate 76.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Direxion Daily Mid vs. Virtus Kar Small Cap
Performance |
| Timeline |
| Direxion Daily Mid |
| Virtus Kar Small |
Direxion Daily and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Virtus Kar
The main advantage of trading using opposite Direxion Daily and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar'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 |
| Virtus Kar vs. Virtus Kar Mid Cap | Virtus Kar vs. Midcap Fund Institutional | Virtus Kar vs. Morgan Stanley Multi | Virtus Kar vs. Growth Portfolio Class |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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