Correlation Between Direxion Daily and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and AIM ETF 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 AIM ETF 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 AIM ETF Products, you can compare the effects of market volatilities on Direxion Daily and AIM ETF 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 AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and AIM ETF.
Diversification Opportunities for Direxion Daily and AIM ETF
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and AIM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Technology and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products 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 AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Direxion Daily i.e., Direxion Daily and AIM ETF go up and down completely randomly.
Pair Corralation between Direxion Daily and AIM ETF
Given the investment horizon of 90 days Direxion Daily Technology is expected to generate 7.84 times more return on investment than AIM ETF. However, Direxion Daily is 7.84 times more volatile than AIM ETF Products. It trades about 0.21 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.34 per unit of risk. If you would invest 8,179 in Direxion Daily Technology on September 1, 2024 and sell it today you would earn a total of 1,172 from holding Direxion Daily Technology or generate 14.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Direxion Daily Technology vs. AIM ETF Products
Performance |
| Timeline |
| Direxion Daily Technology |
| AIM ETF Products |
Direxion Daily and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and AIM ETF
The main advantage of trading using opposite Direxion Daily and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, AIM ETF 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 AIM ETF will offset losses from the drop in AIM ETF'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 |
| AIM ETF vs. Innovator ETFs Trust | AIM ETF vs. First Trust Cboe | AIM ETF vs. Innovator SP 500 | AIM ETF vs. Innovator SP 500 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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