Correlation Between Direxion Daily and MAX S
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and MAX S 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 MAX S 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 MAX S P, you can compare the effects of market volatilities on Direxion Daily and MAX S 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 MAX S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and MAX S.
Diversification Opportunities for Direxion Daily and MAX S
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and MAX is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and MAX S P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAX S P 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 MAX S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAX S P has no effect on the direction of Direxion Daily i.e., Direxion Daily and MAX S go up and down completely randomly.
Pair Corralation between Direxion Daily and MAX S
Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to under-perform the MAX S. In addition to that, Direxion Daily is 1.66 times more volatile than MAX S P. It trades about -0.14 of its total potential returns per unit of risk. MAX S P is currently generating about 0.12 per unit of volatility. If you would invest 4,732 in MAX S P on August 26, 2024 and sell it today you would earn a total of 388.00 from holding MAX S P or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Semiconductor vs. MAX S P
Performance |
| Timeline |
| Direxion Daily Semic |
| MAX S P |
Direxion Daily and MAX S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and MAX S
The main advantage of trading using opposite Direxion Daily and MAX S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, MAX S 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 MAX S will offset losses from the drop in MAX S'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 |
| MAX S vs. Direxion Daily SP | MAX S vs. Direxion Daily Semiconductor | MAX S vs. Direxion Daily Semiconductor |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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