Correlation Between Direxion Daily and VanEck Long
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and VanEck Long 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 VanEck Long 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 VanEck Long Muni, you can compare the effects of market volatilities on Direxion Daily and VanEck Long 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 VanEck Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and VanEck Long.
Diversification Opportunities for Direxion Daily and VanEck Long
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and VanEck is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Technology and VanEck Long Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Long Muni 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 VanEck Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Long Muni has no effect on the direction of Direxion Daily i.e., Direxion Daily and VanEck Long go up and down completely randomly.
Pair Corralation between Direxion Daily and VanEck Long
Given the investment horizon of 90 days Direxion Daily Technology is expected to generate 6.58 times more return on investment than VanEck Long. However, Direxion Daily is 6.58 times more volatile than VanEck Long Muni. It trades about 0.05 of its potential returns per unit of risk. VanEck Long Muni is currently generating about 0.07 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 211.00 from holding Direxion Daily Technology or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Technology vs. VanEck Long Muni
Performance |
| Timeline |
| Direxion Daily Technology |
| VanEck Long Muni |
Direxion Daily and VanEck Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and VanEck Long
The main advantage of trading using opposite Direxion Daily and VanEck Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, VanEck Long 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 VanEck Long will offset losses from the drop in VanEck Long's long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
| VanEck Long vs. Franklin Liberty Intermediate | VanEck Long vs. Hartford Municipal Opportunities | VanEck Long vs. IQ MacKay Municipal |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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