Correlation Between Direxion Shares and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and Pacer Funds 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 Pacer Funds 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 Pacer Funds Trust, you can compare the effects of market volatilities on Direxion Shares and Pacer Funds 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 Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and Pacer Funds.
Diversification Opportunities for Direxion Shares and Pacer Funds
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Pacer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust 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 Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Direxion Shares i.e., Direxion Shares and Pacer Funds go up and down completely randomly.
Pair Corralation between Direxion Shares and Pacer Funds
Given the investment horizon of 90 days Direxion Shares ETF is expected to generate 7.04 times more return on investment than Pacer Funds. However, Direxion Shares is 7.04 times more volatile than Pacer Funds Trust. It trades about 0.1 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.19 per unit of risk. If you would invest 2,419 in Direxion Shares ETF on November 3, 2024 and sell it today you would earn a total of 251.00 from holding Direxion Shares ETF or generate 10.38% 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. Pacer Funds Trust
Performance |
| Timeline |
| Direxion Shares ETF |
| Pacer Funds Trust |
Direxion Shares and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and Pacer Funds
The main advantage of trading using opposite Direxion Shares and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, Pacer Funds 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 Pacer Funds will offset losses from the drop in Pacer Funds' 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 |
| Pacer Funds vs. iShares Dividend and | Pacer Funds vs. Martin Currie Sustainable | Pacer Funds vs. VictoryShares THB Mid | Pacer Funds vs. Mast Global Battery |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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