Correlation Between Direxion Daily and IShares Core
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and IShares Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily NVDA and iShares Core Aggregate, you can compare the effects of market volatilities on Direxion Daily and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and IShares Core.
Diversification Opportunities for Direxion Daily and IShares Core
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and IShares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and iShares Core Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggregate 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 NVDA are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggregate has no effect on the direction of Direxion Daily i.e., Direxion Daily and IShares Core go up and down completely randomly.
Pair Corralation between Direxion Daily and IShares Core
Given the investment horizon of 90 days Direxion Daily NVDA is expected to under-perform the IShares Core. In addition to that, Direxion Daily is 15.7 times more volatile than iShares Core Aggregate. It trades about -0.15 of its total potential returns per unit of risk. iShares Core Aggregate is currently generating about 0.09 per unit of volatility. If you would invest 9,744 in iShares Core Aggregate on September 18, 2024 and sell it today you would earn a total of 57.00 from holding iShares Core Aggregate or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily NVDA vs. iShares Core Aggregate
Performance |
| Timeline |
| Direxion Daily NVDA |
| iShares Core Aggregate |
Direxion Daily and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and IShares Core
The main advantage of trading using opposite Direxion Daily and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China | Direxion Daily vs. Tidal Trust II |
| IShares Core vs. ClearShares Ultra Short Maturity | IShares Core vs. PGIM Active High | IShares Core vs. Pacer Trendpilot Bond | IShares Core vs. Pacer Lunt Large |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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