Correlation Between Direxion Daily and Invesco Physical
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Invesco Physical 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 Invesco Physical 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 Invesco Physical Gold, you can compare the effects of market volatilities on Direxion Daily and Invesco Physical 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 Invesco Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Invesco Physical.
Diversification Opportunities for Direxion Daily and Invesco Physical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Invesco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Invesco Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Physical Gold 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 Invesco Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Physical Gold has no effect on the direction of Direxion Daily i.e., Direxion Daily and Invesco Physical go up and down completely randomly.
Pair Corralation between Direxion Daily and Invesco Physical
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.2 times more return on investment than Invesco Physical. However, Direxion Daily is 3.2 times more volatile than Invesco Physical Gold. It trades about 0.18 of its potential returns per unit of risk. Invesco Physical Gold is currently generating about 0.2 per unit of risk. If you would invest 4,993 in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of 1,739 from holding Direxion Daily Mid or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Direxion Daily Mid vs. Invesco Physical Gold
Performance |
| Timeline |
| Direxion Daily Mid |
| Invesco Physical Gold |
Direxion Daily and Invesco Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Invesco Physical
The main advantage of trading using opposite Direxion Daily and Invesco Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Invesco Physical 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 Invesco Physical will offset losses from the drop in Invesco Physical'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 |
| Invesco Physical vs. AMG Advanced Metallurgical | Invesco Physical vs. Vastned Retail NV | Invesco Physical vs. Reinet Investments SCA | Invesco Physical vs. Allfunds Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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