Correlation Between Vanguard Mid and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Vanguard Mid 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 Vanguard Mid and Direxion Daily 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 Daily Mid, you can compare the effects of market volatilities on Vanguard Mid 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 Vanguard Mid with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Mid and Direxion Daily.
Diversification Opportunities for Vanguard Mid and Direxion Daily
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Direxion is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Direxion Daily Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Mid 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 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 Mid has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Direxion Daily go up and down completely randomly.
Pair Corralation between Vanguard Mid and Direxion Daily
Allowing for the 90-day total investment horizon Vanguard Mid is expected to generate 2.54 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Vanguard Mid Cap Index is 3.86 times less risky than Direxion Daily. It trades about 0.15 of its potential returns per unit of risk. Direxion Daily Mid is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,396 in Direxion Daily Mid on August 24, 2024 and sell it today you would earn a total of 2,875 from holding Direxion Daily Mid or generate 84.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Mid Cap Index vs. Direxion Daily Mid
Performance |
| Timeline |
| Vanguard Mid Cap |
| Direxion Daily Mid |
Vanguard Mid and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Mid and Direxion Daily
The main advantage of trading using opposite Vanguard Mid and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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.| 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 Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily Small |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |