Correlation Between Direxion Daily and Global X
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Direxion Daily and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Global X.
Diversification Opportunities for Direxion Daily and Global X
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Direxion and Global is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Direxion Daily i.e., Direxion Daily and Global X go up and down completely randomly.
Pair Corralation between Direxion Daily and Global X
Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 16.85 times more return on investment than Global X. However, Direxion Daily is 16.85 times more volatile than Global X Funds. It trades about 0.11 of its potential returns per unit of risk. Global X Funds is currently generating about 0.11 per unit of risk. If you would invest 6,836 in Direxion Daily NVDA on November 28, 2024 and sell it today you would earn a total of 727.00 from holding Direxion Daily NVDA or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily NVDA vs. Global X Funds
Performance |
| Timeline |
| Direxion Daily NVDA |
| Global X Funds |
Direxion Daily and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Global X
The main advantage of trading using opposite Direxion Daily and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Direxion Daily vs. Strategy Shares | Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China |
| Global X vs. FT Vest Equity | Global X vs. Northern Lights | Global X vs. Dimensional International High | Global X vs. First Trust Exchange Traded |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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