Correlation Between Direxion Daily and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Dimensional International 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 Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily 20 and Dimensional International Sustainability, you can compare the effects of market volatilities on Direxion Daily and Dimensional International 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 Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Dimensional International.
Diversification Opportunities for Direxion Daily and Dimensional International
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Dimensional is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 20 and Dimensional International Sust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 20 are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Direxion Daily i.e., Direxion Daily and Dimensional International go up and down completely randomly.
Pair Corralation between Direxion Daily and Dimensional International
Considering the 90-day investment horizon Direxion Daily 20 is expected to generate 3.5 times more return on investment than Dimensional International. However, Direxion Daily is 3.5 times more volatile than Dimensional International Sustainability. It trades about 0.14 of its potential returns per unit of risk. Dimensional International Sustainability is currently generating about 0.11 per unit of risk. If you would invest 3,833 in Direxion Daily 20 on October 21, 2024 and sell it today you would earn a total of 191.00 from holding Direxion Daily 20 or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily 20 vs. Dimensional International Sust
Performance |
| Timeline |
| Direxion Daily 20 |
| Dimensional International |
Direxion Daily and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Dimensional International
The main advantage of trading using opposite Direxion Daily and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily 20 | Direxion Daily vs. Direxion Daily 7 10 | Direxion Daily vs. Direxion Daily MSCI |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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