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 SP500 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
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and ETRACS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP500 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 SP500 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 is expected to generate 1.06 times less return on investment than ETRACS 2x. But when comparing it to its historical volatility, Direxion Daily SP500 is 1.56 times less risky than ETRACS 2x. It trades about 0.12 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,292 in ETRACS 2x Leveraged on August 30, 2024 and sell it today you would earn a total of 414.00 from holding ETRACS 2x Leveraged or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
Direxion Daily SP500 vs. ETRACS 2x Leveraged
Performance |
| Timeline |
| Direxion Daily SP500 |
| 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. Direxion Daily SP | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily Small | Direxion Daily vs. Direxion Daily Semiconductor |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |