Correlation Between Direxion Daily and IShares Silver
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and IShares Silver 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 IShares Silver 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 iShares Silver Trust, you can compare the effects of market volatilities on Direxion Daily and IShares Silver 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 IShares Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and IShares Silver.
Diversification Opportunities for Direxion Daily and IShares Silver
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Gold and iShares Silver Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver Trust 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 IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Trust has no effect on the direction of Direxion Daily i.e., Direxion Daily and IShares Silver go up and down completely randomly.
Pair Corralation between Direxion Daily and IShares Silver
Given the investment horizon of 90 days Direxion Daily Gold is expected to under-perform the IShares Silver. In addition to that, Direxion Daily is 2.37 times more volatile than iShares Silver Trust. It trades about -0.23 of its total potential returns per unit of risk. iShares Silver Trust is currently generating about -0.33 per unit of volatility. If you would invest 3,139 in iShares Silver Trust on August 30, 2024 and sell it today you would lose (394.00) from holding iShares Silver Trust or give up 12.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Daily Gold vs. iShares Silver Trust
Performance |
| Timeline |
| Direxion Daily Gold |
| iShares Silver Trust |
Direxion Daily and IShares Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and IShares Silver
The main advantage of trading using opposite Direxion Daily and IShares Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, IShares Silver 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 IShares Silver will offset losses from the drop in IShares Silver's long position.| Direxion Daily vs. Direxion Daily Gold | Direxion Daily vs. Direxion Daily Junior | Direxion Daily vs. Direxion Daily Junior | Direxion Daily vs. VanEck Gold Miners |
| IShares Silver vs. SPDR Gold Shares | IShares Silver vs. VanEck Gold Miners | IShares Silver vs. United States Oil | IShares Silver vs. iShares Gold Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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