Correlation Between Direxion Shares and Global X
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Direxion Shares and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and Global X.
Diversification Opportunities for Direxion Shares and Global X
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Global is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Direxion Shares i.e., Direxion Shares and Global X go up and down completely randomly.
Pair Corralation between Direxion Shares and Global X
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 10.78 times more return on investment than Global X. However, Direxion Shares is 10.78 times more volatile than Global X Funds. It trades about 0.15 of its potential returns per unit of risk. Global X Funds is currently generating about -0.22 per unit of risk. If you would invest 1,292 in Direxion Shares ETF on October 24, 2024 and sell it today you would earn a total of 1,699 from holding Direxion Shares ETF or generate 131.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Direxion Shares ETF vs. Global X Funds
Performance |
| Timeline |
| Direxion Shares ETF |
| Global X Funds |
Direxion Shares and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and Global X
The main advantage of trading using opposite Direxion Shares and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X'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 |
| Global X vs. Freedom Day Dividend | Global X vs. iShares MSCI China | Global X vs. SmartETFs Dividend Builder | Global X vs. Tidal ETF Trust |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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