Correlation Between Direxion Daily and Tradr 2X
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Tradr 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 Tradr 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 Tradr 2X Long, you can compare the effects of market volatilities on Direxion Daily and Tradr 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Tradr 2X.
Diversification Opportunities for Direxion Daily and Tradr 2X
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Tradr is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP500 and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of Direxion Daily i.e., Direxion Daily and Tradr 2X go up and down completely randomly.
Pair Corralation between Direxion Daily and Tradr 2X
Given the investment horizon of 90 days Direxion Daily SP500 is expected to generate 1.53 times more return on investment than Tradr 2X. However, Direxion Daily is 1.53 times more volatile than Tradr 2X Long. It trades about 0.09 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.12 per unit of risk. If you would invest 17,337 in Direxion Daily SP500 on November 4, 2024 and sell it today you would earn a total of 661.00 from holding Direxion Daily SP500 or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP500 vs. Tradr 2X Long
Performance |
| Timeline |
| Direxion Daily SP500 |
| Tradr 2X Long |
Direxion Daily and Tradr 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Tradr 2X
The main advantage of trading using opposite Direxion Daily and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Tradr 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 Tradr 2X will offset losses from the drop in Tradr 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 |
| Tradr 2X vs. ProShares Ultra SP500 | Tradr 2X vs. Direxion Daily SP500 | Tradr 2X vs. ProShares Ultra QQQ | Tradr 2X vs. ProShares UltraPro SP500 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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