Correlation Between Global X and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Global X and Direxion Daily 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 Global X and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MLP and Direxion Daily Regional, you can compare the effects of market volatilities on Global X and Direxion Daily 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 Global X with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Direxion Daily.
Diversification Opportunities for Global X and Direxion Daily
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Direxion is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X MLP and Direxion Daily Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Regional and Global X 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 Global X MLP are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Regional has no effect on the direction of Global X i.e., Global X and Direxion Daily go up and down completely randomly.
Pair Corralation between Global X and Direxion Daily
Given the investment horizon of 90 days Global X is expected to generate 4.03 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Global X MLP is 7.43 times less risky than Direxion Daily. It trades about 0.41 of its potential returns per unit of risk. Direxion Daily Regional is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 10,482 in Direxion Daily Regional on September 4, 2024 and sell it today you would earn a total of 4,714 from holding Direxion Daily Regional or generate 44.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X MLP vs. Direxion Daily Regional
Performance |
| Timeline |
| Global X MLP |
| Direxion Daily Regional |
Global X and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Direxion Daily
The main advantage of trading using opposite Global X and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| Global X vs. Global X MLP | Global X vs. Alerian Energy Infrastructure | Global X vs. First Trust North | Global X vs. Tortoise North American |
| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. MicroSectors FANG Index | Direxion Daily vs. ProShares Ultra Financials |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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