Correlation Between Direxion Daily and GQQQ
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and GQQQ 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 GQQQ 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 GQQQ, you can compare the effects of market volatilities on Direxion Daily and GQQQ 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 GQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and GQQQ.
Diversification Opportunities for Direxion Daily and GQQQ
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and GQQQ is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and GQQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GQQQ 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 GQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GQQQ has no effect on the direction of Direxion Daily i.e., Direxion Daily and GQQQ go up and down completely randomly.
Pair Corralation between Direxion Daily and GQQQ
Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 7.86 times more return on investment than GQQQ. However, Direxion Daily is 7.86 times more volatile than GQQQ. It trades about 0.11 of its potential returns per unit of risk. GQQQ is currently generating about 0.13 per unit of risk. If you would invest 2,758 in Direxion Daily NVDA on September 14, 2024 and sell it today you would earn a total of 6,727 from holding Direxion Daily NVDA or generate 243.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 21.29% |
| Values | Daily Returns |
Direxion Daily NVDA vs. GQQQ
Performance |
| Timeline |
| Direxion Daily NVDA |
| GQQQ |
Direxion Daily and GQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and GQQQ
The main advantage of trading using opposite Direxion Daily and GQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, GQQQ 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 GQQQ will offset losses from the drop in GQQQ'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 |
| GQQQ vs. FT Vest Equity | GQQQ vs. Northern Lights | GQQQ vs. Dimensional International High | GQQQ vs. JPMorgan Fundamental Data |
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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