Correlation Between United States and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both United States and Direxion Daily 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 United States and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Oil and Direxion Daily Energy, you can compare the effects of market volatilities on United States and Direxion Daily 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 United States with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Direxion Daily.
Diversification Opportunities for United States and Direxion Daily
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Direxion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding United States Oil and Direxion Daily Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Energy and United States 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 United States Oil are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Energy has no effect on the direction of United States i.e., United States and Direxion Daily go up and down completely randomly.
Pair Corralation between United States and Direxion Daily
Considering the 90-day investment horizon United States is expected to generate 3.03 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, United States Oil is 1.27 times less risky than Direxion Daily. It trades about 0.16 of its potential returns per unit of risk. Direxion Daily Energy is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 6,079 in Direxion Daily Energy on August 27, 2024 and sell it today you would earn a total of 1,084 from holding Direxion Daily Energy or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Oil vs. Direxion Daily Energy
Performance |
| Timeline |
| United States Oil |
| Direxion Daily Energy |
United States and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Direxion Daily
The main advantage of trading using opposite United States and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| United States vs. United States Natural | United States vs. SPDR Gold Shares | United States vs. ProShares Ultra Bloomberg | United States vs. Energy Select Sector |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |