Correlation Between Direxion Daily and ETRACS 2x
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and ETRACS 2x 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 ETRACS 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Semiconductor and ETRACS 2x Leveraged, you can compare the effects of market volatilities on Direxion Daily and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and ETRACS 2x.
Diversification Opportunities for Direxion Daily and ETRACS 2x
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and ETRACS is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 Semiconductor are associated (or correlated) with ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of Direxion Daily i.e., Direxion Daily and ETRACS 2x go up and down completely randomly.
Pair Corralation between Direxion Daily and ETRACS 2x
Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to generate 2.6 times more return on investment than ETRACS 2x. However, Direxion Daily is 2.6 times more volatile than ETRACS 2x Leveraged. It trades about 0.06 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.1 per unit of risk. If you would invest 1,213 in Direxion Daily Semiconductor on August 30, 2024 and sell it today you would earn a total of 1,485 from holding Direxion Daily Semiconductor or generate 122.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Direxion Daily Semiconductor vs. ETRACS 2x Leveraged
Performance |
| Timeline |
| Direxion Daily Semic |
| ETRACS 2x Leveraged |
Direxion Daily and ETRACS 2x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and ETRACS 2x
The main advantage of trading using opposite Direxion Daily and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x's long position.| Direxion Daily vs. ProShares UltraPro QQQ | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. MicroSectors FANG Index | Direxion Daily vs. Direxion Daily Technology |
| ETRACS 2x vs. ABIVAX Socit Anonyme | ETRACS 2x vs. Morningstar Unconstrained Allocation | ETRACS 2x vs. SPACE | ETRACS 2x vs. Knife River |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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