Correlation Between Direxion Daily and Direxion Daily

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Can any of the company-specific risk be diversified away by investing in both Direxion Daily 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 Direxion Daily and Direxion Daily 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 Direxion Daily Transportation, you can compare the effects of market volatilities on Direxion Daily 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 Direxion Daily with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Direxion Daily.

Diversification Opportunities for Direxion Daily and Direxion Daily

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Direxion and Direxion is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and Direxion Daily Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Trans 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 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 Trans has no effect on the direction of Direxion Daily i.e., Direxion Daily and Direxion Daily go up and down completely randomly.

Pair Corralation between Direxion Daily and Direxion Daily

Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to generate 1.24 times more return on investment than Direxion Daily. However, Direxion Daily is 1.24 times more volatile than Direxion Daily Transportation. It trades about 0.15 of its potential returns per unit of risk. Direxion Daily Transportation is currently generating about 0.18 per unit of risk. If you would invest  2,015  in Direxion Daily Semiconductor on August 29, 2024 and sell it today you would earn a total of  349.00  from holding Direxion Daily Semiconductor or generate 17.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Direxion Daily Semiconductor  vs.  Direxion Daily Transportation

 Performance 
       Timeline  
Direxion Daily Semic 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Semiconductor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Direxion Daily Trans 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Transportation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Direxion Daily reported solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily and Direxion Daily Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and Direxion Daily

The main advantage of trading using opposite Direxion Daily and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily 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.
The idea behind Direxion Daily Semiconductor and Direxion Daily Transportation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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.

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