Correlation Between Direxion Daily and VanEck Semiconductor
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and VanEck Semiconductor 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 VanEck Semiconductor 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 VanEck Semiconductor ETF, you can compare the effects of market volatilities on Direxion Daily and VanEck Semiconductor 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 VanEck Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and VanEck Semiconductor.
Diversification Opportunities for Direxion Daily and VanEck Semiconductor
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and VanEck is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and VanEck Semiconductor ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Semiconductor ETF 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 VanEck Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Semiconductor ETF has no effect on the direction of Direxion Daily i.e., Direxion Daily and VanEck Semiconductor go up and down completely randomly.
Pair Corralation between Direxion Daily and VanEck Semiconductor
Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to generate 2.92 times more return on investment than VanEck Semiconductor. However, Direxion Daily is 2.92 times more volatile than VanEck Semiconductor ETF. It trades about 0.05 of its potential returns per unit of risk. VanEck Semiconductor ETF is currently generating about 0.09 per unit of risk. If you would invest 1,443 in Direxion Daily Semiconductor on November 19, 2024 and sell it today you would earn a total of 1,412 from holding Direxion Daily Semiconductor or generate 97.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Semiconductor vs. VanEck Semiconductor ETF
Performance |
| Timeline |
| Direxion Daily Semic |
| VanEck Semiconductor ETF |
Direxion Daily and VanEck Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and VanEck Semiconductor
The main advantage of trading using opposite Direxion Daily and VanEck Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, VanEck Semiconductor 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 VanEck Semiconductor will offset losses from the drop in VanEck Semiconductor'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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