Correlation Between Direxion Shares and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and SPDR Dow 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 Dow 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 Dow Jones, you can compare the effects of market volatilities on Direxion Shares and SPDR Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and SPDR Dow.
Diversification Opportunities for Direxion Shares and SPDR Dow
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and SPDR is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Direxion Shares i.e., Direxion Shares and SPDR Dow go up and down completely randomly.
Pair Corralation between Direxion Shares and SPDR Dow
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 5.73 times more return on investment than SPDR Dow. However, Direxion Shares is 5.73 times more volatile than SPDR Dow Jones. It trades about 0.07 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.03 per unit of risk. If you would invest 879.00 in Direxion Shares ETF on October 21, 2024 and sell it today you would earn a total of 2,112 from holding Direxion Shares ETF or generate 240.27% 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 Dow Jones
Performance |
| Timeline |
| Direxion Shares ETF |
| SPDR Dow Jones |
Direxion Shares and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and SPDR Dow
The main advantage of trading using opposite Direxion Shares and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, SPDR Dow 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 Dow will offset losses from the drop in SPDR Dow'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 |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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