Correlation Between Direxion Daily and Vanguard ESG
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Vanguard ESG 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 Vanguard ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Technology and Vanguard ESG Stock, you can compare the effects of market volatilities on Direxion Daily and Vanguard ESG 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 Vanguard ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Vanguard ESG.
Diversification Opportunities for Direxion Daily and Vanguard ESG
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Technology and Vanguard ESG Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard ESG Stock 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 Technology are associated (or correlated) with Vanguard ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard ESG Stock has no effect on the direction of Direxion Daily i.e., Direxion Daily and Vanguard ESG go up and down completely randomly.
Pair Corralation between Direxion Daily and Vanguard ESG
Given the investment horizon of 90 days Direxion Daily Technology is expected to generate 4.17 times more return on investment than Vanguard ESG. However, Direxion Daily is 4.17 times more volatile than Vanguard ESG Stock. It trades about 0.05 of its potential returns per unit of risk. Vanguard ESG Stock is currently generating about 0.18 per unit of risk. If you would invest 9,151 in Direxion Daily Technology on August 27, 2024 and sell it today you would earn a total of 202.00 from holding Direxion Daily Technology or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Technology vs. Vanguard ESG Stock
Performance |
| Timeline |
| Direxion Daily Technology |
| Vanguard ESG Stock |
Direxion Daily and Vanguard ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Vanguard ESG
The main advantage of trading using opposite Direxion Daily and Vanguard ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Vanguard ESG 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 Vanguard ESG will offset losses from the drop in Vanguard ESG's long position.| Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
| Vanguard ESG vs. Vanguard ESG International | Vanguard ESG vs. iShares ESG Aware | Vanguard ESG vs. iShares MSCI USA | Vanguard ESG vs. iShares ESG Aware |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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