Correlation Between Direxion Daily and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and SPDR Bloomberg 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 SPDR Bloomberg 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 SPDR Bloomberg Short, you can compare the effects of market volatilities on Direxion Daily and SPDR Bloomberg 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 SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and SPDR Bloomberg.
Diversification Opportunities for Direxion Daily and SPDR Bloomberg
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Direxion and SPDR is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and SPDR Bloomberg Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Short 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Short has no effect on the direction of Direxion Daily i.e., Direxion Daily and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between Direxion Daily and SPDR Bloomberg
Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 18.57 times more return on investment than SPDR Bloomberg. However, Direxion Daily is 18.57 times more volatile than SPDR Bloomberg Short. It trades about 0.03 of its potential returns per unit of risk. SPDR Bloomberg Short is currently generating about 0.26 per unit of risk. If you would invest 9,683 in Direxion Daily NVDA on November 18, 2024 and sell it today you would lose (551.00) from holding Direxion Daily NVDA or give up 5.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily NVDA vs. SPDR Bloomberg Short
Performance |
| Timeline |
| Direxion Daily NVDA |
| SPDR Bloomberg Short |
Direxion Daily and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and SPDR Bloomberg
The main advantage of trading using opposite Direxion Daily and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, SPDR Bloomberg 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 SPDR Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.| Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Tidal Trust II | Direxion Daily vs. Direxion Daily META | Direxion Daily vs. Direxion Daily META |
| SPDR Bloomberg vs. SPDR Bloomberg International | SPDR Bloomberg vs. iShares 1 3 Year | SPDR Bloomberg vs. SPDR Bloomberg International | SPDR Bloomberg vs. SPDR FTSE International |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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