Correlation Between Direxion Daily and SPDR SSGA

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and SPDR SSGA 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 SPDR SSGA 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 SPDR SSGA Sector, you can compare the effects of market volatilities on Direxion Daily and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and SPDR SSGA.

Diversification Opportunities for Direxion Daily and SPDR SSGA

-0.43

Correlation Coefficient

Direxion Daily  SPDR SSGA

Very good diversification

The 3 months correlation between Direxion and SPDR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and SPDR SSGA Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Sector 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Sector has no effect on the direction of Direxion Daily i.e., Direxion Daily and SPDR SSGA go up and down completely randomly.

Pair Corralation between Direxion Daily and SPDR SSGA

Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 4.14 times more return on investment than SPDR SSGA. However, Direxion Daily is 4.14 times more volatile than SPDR SSGA Sector. It trades about 0.03 of its potential returns per unit of risk. SPDR SSGA Sector is currently generating about 0.07 per unit of risk. If you would invest  10,094  in Direxion Daily Regional on September 10, 2025 and sell it today you would earn a total of  31.00  from holding Direxion Daily Regional or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Regional  vs.  SPDR SSGA Sector

Direxion Daily Regional

Risk-Adjusted Performance

Weakest

Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Direxion Daily is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR SSGA Sector

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Sector are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, SPDR SSGA may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Direxion Daily and SPDR SSGA

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

The idea behind Direxion Daily Regional and SPDR SSGA Sector 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 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.