Correlation Between Direxion Daily and FT Vest
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and FT Vest 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 Daily and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Dow and FT Vest Nasdaq 100, you can compare the effects of market volatilities on Direxion Daily and FT Vest 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 Daily with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and FT Vest.
Diversification Opportunities for Direxion Daily and FT Vest
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and QMNV is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Dow and FT Vest Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Nasdaq and Direxion Daily 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 Daily Dow are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Nasdaq has no effect on the direction of Direxion Daily i.e., Direxion Daily and FT Vest go up and down completely randomly.
Pair Corralation between Direxion Daily and FT Vest
Given the investment horizon of 90 days Direxion Daily Dow is expected to generate 14.83 times more return on investment than FT Vest. However, Direxion Daily is 14.83 times more volatile than FT Vest Nasdaq 100. It trades about 0.11 of its potential returns per unit of risk. FT Vest Nasdaq 100 is currently generating about 0.5 per unit of risk. If you would invest 1,067 in Direxion Daily Dow on September 12, 2024 and sell it today you would earn a total of 2,136 from holding Direxion Daily Dow or generate 200.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.14% |
| Values | Daily Returns |
Direxion Daily Dow vs. FT Vest Nasdaq 100
Performance |
| Timeline |
| Direxion Daily Dow |
| FT Vest Nasdaq |
Direxion Daily and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and FT Vest
The main advantage of trading using opposite Direxion Daily and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. ProShares UltraPro SP500 |
| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. JPMorgan Fundamental Data |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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