Correlation Between Direxion Daily and US Global
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and US Global 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 US Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Gold and US Global GO, you can compare the effects of market volatilities on Direxion Daily and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and US Global.
Diversification Opportunities for Direxion Daily and US Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and GOAU is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Gold and US Global GO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global GO 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 Gold are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global GO has no effect on the direction of Direxion Daily i.e., Direxion Daily and US Global go up and down completely randomly.
Pair Corralation between Direxion Daily and US Global
Given the investment horizon of 90 days Direxion Daily Gold is expected to under-perform the US Global. In addition to that, Direxion Daily is 1.96 times more volatile than US Global GO. It trades about -0.22 of its total potential returns per unit of risk. US Global GO is currently generating about -0.19 per unit of volatility. If you would invest 2,296 in US Global GO on August 28, 2024 and sell it today you would lose (216.00) from holding US Global GO or give up 9.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Gold vs. US Global GO
Performance |
| Timeline |
| Direxion Daily Gold |
| US Global GO |
Direxion Daily and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and US Global
The main advantage of trading using opposite Direxion Daily and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
| US Global vs. iShares Silver Trust | US Global vs. SPDR Gold Shares | US Global vs. Newmont Goldcorp Corp | US Global vs. Direxion Daily Gold |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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