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 5 10, 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
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and IShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and iShares Core 5 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 5 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 5 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 generate 12.88 times more return on investment than IShares Core. However, Direxion Daily is 12.88 times more volatile than iShares Core 5 10. It trades about 0.03 of its potential returns per unit of risk. iShares Core 5 10 is currently generating about 0.15 per unit of risk. If you would invest 11,477 in Direxion Daily NVDA on September 3, 2024 and sell it today you would earn a total of 136.00 from holding Direxion Daily NVDA or generate 1.18% 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 5 10
Performance |
| Timeline |
| Direxion Daily NVDA |
| iShares Core 5 |
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. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. Direxion Daily SP |
| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Core International | IShares Core vs. iShares Core 10 | IShares Core vs. iShares Edge Investment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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