Correlation Between VanEck Oil and Direxion Daily

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

By analyzing existing cross correlation between VanEck Oil Services and Direxion Daily Junior, you can compare the effects of market volatilities on VanEck Oil and Direxion Daily 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 VanEck Oil with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and Direxion Daily.

Diversification Opportunities for VanEck Oil and Direxion Daily

-0.52

Correlation Coefficient

VanEck Oil  Direxion Daily

Excellent diversification

The 3 months correlation between VanEck and Direxion is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and Direxion Daily Junior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Junior and VanEck Oil 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 VanEck Oil Services are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Junior has no effect on the direction of VanEck Oil i.e., VanEck Oil and Direxion Daily go up and down completely randomly.

Pair Corralation between VanEck Oil and Direxion Daily

Considering the 90-day investment horizon VanEck Oil Services is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, VanEck Oil Services is 1.47 times less risky than Direxion Daily. The etf trades about -0.02 of its potential returns per unit of risk. The Direxion Daily Junior is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  943.00  in Direxion Daily Junior on May 5, 2025 and sell it today you would earn a total of  108.00  from holding Direxion Daily Junior or generate 11.45% return on investment over 90 days.

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

VanEck Oil Services  vs.  Direxion Daily Junior

VanEck Oil Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Oil Services are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, VanEck Oil may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Direxion Daily Junior

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Junior has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with VanEck Oil and Direxion Daily

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

The idea behind VanEck Oil Services and Direxion Daily Junior 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.