Correlation Between Direxion Shares and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and SPDR SSgA 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 SPDR SSgA 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 SPDR SSgA Multi Asset, you can compare the effects of market volatilities on Direxion Shares and SPDR SSgA 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 SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and SPDR SSgA.
Diversification Opportunities for Direxion Shares and SPDR SSgA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and SPDR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and SPDR SSgA Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Multi 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 SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Multi has no effect on the direction of Direxion Shares i.e., Direxion Shares and SPDR SSgA go up and down completely randomly.
Pair Corralation between Direxion Shares and SPDR SSgA
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 13.62 times more return on investment than SPDR SSgA. However, Direxion Shares is 13.62 times more volatile than SPDR SSgA Multi Asset. It trades about 0.09 of its potential returns per unit of risk. SPDR SSgA Multi Asset is currently generating about 0.33 per unit of risk. If you would invest 2,419 in Direxion Shares ETF on November 2, 2024 and sell it today you would earn a total of 199.00 from holding Direxion Shares ETF or generate 8.23% 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. SPDR SSgA Multi Asset
Performance |
| Timeline |
| Direxion Shares ETF |
| SPDR SSgA Multi |
Direxion Shares and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and SPDR SSgA
The main advantage of trading using opposite Direxion Shares and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, SPDR SSgA 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 SPDR SSgA will offset losses from the drop in SPDR SSgA'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 |
| SPDR SSgA vs. SPDR SSgA Global | SPDR SSgA vs. SPDR SSgA Income | SPDR SSgA vs. VanEck Inflation Allocation | SPDR SSgA vs. SPDR MSCI EAFE |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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