Correlation Between Direxion Daily and MicroSectorsTM Oil

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

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

Diversification Opportunities for Direxion Daily and MicroSectorsTM Oil

-0.79

Correlation Coefficient

Direxion Daily  MicroSectorsTM Oil

Pay attention - limited upside

The 3 months correlation between Direxion and MicroSectorsTM is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas 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 SP are associated (or correlated) with MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of Direxion Daily i.e., Direxion Daily and MicroSectorsTM Oil go up and down completely randomly.

Pair Corralation between Direxion Daily and MicroSectorsTM Oil

Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the MicroSectorsTM Oil. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily SP is 1.13 times less risky than MicroSectorsTM Oil. The etf trades about -0.05 of its potential returns per unit of risk. The MicroSectorsTM Oil Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,025  in MicroSectorsTM Oil Gas on May 24, 2025 and sell it today you would earn a total of  280.00  from holding MicroSectorsTM Oil Gas or generate 13.83% return on investment over 90 days.

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

Direxion Daily SP  vs.  MicroSectorsTM Oil Gas

Direxion Daily SP

Risk-Adjusted Performance

Weakest

Over the last 90 days Direxion Daily SP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Etf's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

MicroSectorsTM Oil Gas

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectorsTM Oil Gas are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, MicroSectorsTM Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and MicroSectorsTM Oil

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

The idea behind Direxion Daily SP and MicroSectorsTM Oil Gas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.