Correlation Between Direxion Daily and SPDR Bloomberg
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and SPDR Bloomberg 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 SPDR Bloomberg 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 SPDR Bloomberg International, you can compare the effects of market volatilities on Direxion Daily and SPDR Bloomberg 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 SPDR Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and SPDR Bloomberg.
Diversification Opportunities for Direxion Daily and SPDR Bloomberg
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and SPDR is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Technology and SPDR Bloomberg International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Inter 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Inter has no effect on the direction of Direxion Daily i.e., Direxion Daily and SPDR Bloomberg go up and down completely randomly.
Pair Corralation between Direxion Daily and SPDR Bloomberg
Given the investment horizon of 90 days Direxion Daily Technology is expected to generate 6.92 times more return on investment than SPDR Bloomberg. However, Direxion Daily is 6.92 times more volatile than SPDR Bloomberg International. It trades about 0.08 of its potential returns per unit of risk. SPDR Bloomberg International is currently generating about 0.03 per unit of risk. If you would invest 2,850 in Direxion Daily Technology on September 3, 2024 and sell it today you would earn a total of 6,501 from holding Direxion Daily Technology or generate 228.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Technology vs. SPDR Bloomberg International
Performance |
| Timeline |
| Direxion Daily Technology |
| SPDR Bloomberg Inter |
Direxion Daily and SPDR Bloomberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and SPDR Bloomberg
The main advantage of trading using opposite Direxion Daily and SPDR Bloomberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, SPDR Bloomberg 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 SPDR Bloomberg will offset losses from the drop in SPDR Bloomberg's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. ProShares UltraPro SP500 |
| SPDR Bloomberg vs. iShares 1 3 Year | SPDR Bloomberg vs. SPDR Bloomberg International | SPDR Bloomberg vs. SPDR FTSE International | SPDR Bloomberg vs. iShares International Treasury |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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