Correlation Between Direxion Shares and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and Stone Ridge 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 Stone Ridge 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 Stone Ridge 2060, you can compare the effects of market volatilities on Direxion Shares and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and Stone Ridge.
Diversification Opportunities for Direxion Shares and Stone Ridge
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Stone is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and Stone Ridge 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2060 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2060 has no effect on the direction of Direxion Shares i.e., Direxion Shares and Stone Ridge go up and down completely randomly.
Pair Corralation between Direxion Shares and Stone Ridge
Given the investment horizon of 90 days Direxion Shares ETF is expected to under-perform the Stone Ridge. In addition to that, Direxion Shares is 12.67 times more volatile than Stone Ridge 2060. It trades about -0.05 of its total potential returns per unit of risk. Stone Ridge 2060 is currently generating about 0.06 per unit of volatility. If you would invest 1,689 in Stone Ridge 2060 on November 1, 2024 and sell it today you would earn a total of 11.00 from holding Stone Ridge 2060 or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Direxion Shares ETF vs. Stone Ridge 2060
Performance |
| Timeline |
| Direxion Shares ETF |
| Stone Ridge 2060 |
Direxion Shares and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and Stone Ridge
The main advantage of trading using opposite Direxion Shares and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge'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 |
| Stone Ridge vs. Global X Funds | Stone Ridge vs. US Treasury 12 | Stone Ridge vs. Tidal Trust II | Stone Ridge vs. Franklin Liberty 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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