Correlation Between T Rex and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both T Rex and Direxion Daily 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 T Rex and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rex 2X Long and Direxion Daily SP, you can compare the effects of market volatilities on T Rex and Direxion Daily 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 T Rex with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Direxion Daily.
Diversification Opportunities for T Rex and Direxion Daily
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NVDX and Direxion is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and T Rex 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 T Rex 2X Long are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP has no effect on the direction of T Rex i.e., T Rex and Direxion Daily go up and down completely randomly.
Pair Corralation between T Rex and Direxion Daily
Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, T Rex 2X Long is 1.06 times less risky than Direxion Daily. The etf trades about -0.08 of its potential returns per unit of risk. The Direxion Daily SP is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 587.00 in Direxion Daily SP on August 30, 2024 and sell it today you would lose (38.00) from holding Direxion Daily SP or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
T Rex 2X Long vs. Direxion Daily SP
Performance |
| Timeline |
| T Rex 2X |
| Direxion Daily SP |
T Rex and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rex and Direxion Daily
The main advantage of trading using opposite T Rex and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| T Rex vs. Freedom Day Dividend | T Rex vs. Franklin Templeton ETF | T Rex vs. iShares MSCI China | T Rex vs. Tidal Trust II |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |