Correlation Between Vanguard International and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Vanguard International 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 International 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 International Equity and Direxion Shares ETF, you can compare the effects of market volatilities on Vanguard International 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 International with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Direxion Shares.
Diversification Opportunities for Vanguard International and Direxion Shares
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Direxion is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Equity 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 International 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 International Equity 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 International i.e., Vanguard International and Direxion Shares go up and down completely randomly.
Pair Corralation between Vanguard International and Direxion Shares
Assuming the 90 days trading horizon Vanguard International Equity is expected to generate 0.28 times more return on investment than Direxion Shares. However, Vanguard International Equity is 3.58 times less risky than Direxion Shares. It trades about 0.05 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about 0.0 per unit of risk. If you would invest 74,443 in Vanguard International Equity on September 3, 2024 and sell it today you would earn a total of 18,821 from holding Vanguard International Equity or generate 25.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Equity vs. Direxion Shares ETF
Performance |
| Timeline |
| Vanguard International |
| Direxion Shares ETF |
Vanguard International and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Direxion Shares
The main advantage of trading using opposite Vanguard International and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International 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 International vs. iShares Core MSCI | Vanguard International vs. The Select Sector | Vanguard International vs. Promotora y Operadora | Vanguard International vs. iShares Global Timber |
| Direxion Shares vs. Vanguard Index Funds | Direxion Shares vs. Vanguard Index Funds | Direxion Shares vs. Vanguard STAR Funds | Direxion Shares vs. SPDR SP 500 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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