Correlation Between Direxion Daily and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Direxion Shares 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 Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP and Direxion Shares ETF, you can compare the effects of market volatilities on Direxion Daily and Direxion Shares 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 Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Direxion Shares.
Diversification Opportunities for Direxion Daily and Direxion Shares
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and Direxion is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares 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 SP are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Direxion Daily i.e., Direxion Daily and Direxion Shares go up and down completely randomly.
Pair Corralation between Direxion Daily and Direxion Shares
Given the investment horizon of 90 days Direxion Daily SP is expected to generate 0.28 times more return on investment than Direxion Shares. However, Direxion Daily SP is 3.6 times less risky than Direxion Shares. It trades about -0.07 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.09 per unit of risk. If you would invest 1,436 in Direxion Daily SP on November 9, 2024 and sell it today you would lose (366.00) from holding Direxion Daily SP or give up 25.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 37.12% |
| Values | Daily Returns |
Direxion Daily SP vs. Direxion Shares ETF
Performance |
| Timeline |
| Direxion Daily SP |
| Direxion Shares ETF |
Direxion Daily and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Direxion Shares
The main advantage of trading using opposite Direxion Daily and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| Direxion Daily vs. ProShares Short QQQ | Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. ProShares Short Russell2000 | Direxion Daily vs. ProShares Short SP500 |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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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