Correlation Between Vanguard Mid and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid and Direxion Shares 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 Vanguard Mid and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Mid Cap Index and Direxion Shares ETF, you can compare the effects of market volatilities on Vanguard Mid and Direxion Shares 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 Vanguard Mid with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Direxion Shares.
Diversification Opportunities for Vanguard Mid and Direxion Shares
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Direxion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and Vanguard Mid 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 Vanguard Mid Cap Index are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Direxion Shares go up and down completely randomly.
Pair Corralation between Vanguard Mid and Direxion Shares
Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to generate 0.22 times more return on investment than Direxion Shares. However, Vanguard Mid Cap Index is 4.58 times less risky than Direxion Shares. It trades about 0.34 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.08 per unit of risk. If you would invest 26,413 in Vanguard Mid Cap Index on November 1, 2024 and sell it today you would earn a total of 1,342 from holding Vanguard Mid Cap Index or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Direxion Shares ETF
Performance |
| Timeline |
| Vanguard Mid Cap |
| Direxion Shares ETF |
Vanguard Mid and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Direxion Shares
The main advantage of trading using opposite Vanguard Mid and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| Vanguard Mid vs. Vanguard Small Cap Index | Vanguard Mid vs. Vanguard Large Cap Index | Vanguard Mid vs. Vanguard Small Cap Growth | Vanguard Mid vs. Vanguard Small Cap Value |
| Direxion Shares vs. Freedom Day Dividend | Direxion Shares vs. Franklin Templeton ETF | Direxion Shares vs. iShares MSCI China | Direxion Shares vs. Tidal Trust II |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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