Correlation Between Direxion Shares and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and IShares MSCI 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 Shares and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Shares ETF and iShares MSCI Global, you can compare the effects of market volatilities on Direxion Shares and IShares MSCI 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 Shares with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and IShares MSCI.
Diversification Opportunities for Direxion Shares and IShares MSCI
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and IShares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global and Direxion Shares 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 Shares ETF are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of Direxion Shares i.e., Direxion Shares and IShares MSCI go up and down completely randomly.
Pair Corralation between Direxion Shares and IShares MSCI
Given the investment horizon of 90 days Direxion Shares ETF is expected to under-perform the IShares MSCI. In addition to that, Direxion Shares is 15.61 times more volatile than iShares MSCI Global. It trades about -0.03 of its total potential returns per unit of risk. iShares MSCI Global is currently generating about 0.07 per unit of volatility. If you would invest 10,948 in iShares MSCI Global on October 23, 2024 and sell it today you would earn a total of 78.00 from holding iShares MSCI Global or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Shares ETF vs. iShares MSCI Global
Performance |
| Timeline |
| Direxion Shares ETF |
| iShares MSCI Global |
Direxion Shares and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and IShares MSCI
The main advantage of trading using opposite Direxion Shares and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. AXS TSLA Bear | Direxion Shares vs. Direxion Daily AMZN |
| IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. BMO Long Federal | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. Vanguard Total Market |
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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