Correlation Between Direxion Daily and VanEck ETF

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and VanEck ETF 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 VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily Regional and VanEck ETF Trust, you can compare the effects of market volatilities on Direxion Daily and VanEck ETF 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 VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and VanEck ETF.

Diversification Opportunities for Direxion Daily and VanEck ETF

0.41

Correlation Coefficient

Direxion Daily  VanEck ETF

Very weak diversification

The 3 months correlation between Direxion and VanEck is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 Regional are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Direxion Daily i.e., Direxion Daily and VanEck ETF go up and down completely randomly.

Pair Corralation between Direxion Daily and VanEck ETF

Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 2.93 times more return on investment than VanEck ETF. However, Direxion Daily is 2.93 times more volatile than VanEck ETF Trust. It trades about 0.06 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.16 per unit of risk. If you would invest  7,461  in Direxion Daily Regional on May 5, 2025 and sell it today you would earn a total of  762.00  from holding Direxion Daily Regional or generate 10.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.08%
Values	Daily Returns

Direxion Daily Regional  vs.  VanEck ETF Trust

Direxion Daily Regional

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Regional are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

VanEck ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, VanEck ETF showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and VanEck ETF

The main advantage of trading using opposite Direxion Daily and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.

The idea behind Direxion Daily Regional and VanEck ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.