Correlation Between AIM ETF and Direxion Daily

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

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

Diversification Opportunities for AIM ETF and Direxion Daily

-0.55

Correlation Coefficient

AIM ETF  Direxion Daily

Excellent diversification

The 3 months correlation between AIM and Direxion is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and AIM ETF 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 AIM ETF Products 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 SP has no effect on the direction of AIM ETF i.e., AIM ETF and Direxion Daily go up and down completely randomly.

Pair Corralation between AIM ETF and Direxion Daily

Given the investment horizon of 90 days AIM ETF is expected to generate 1.5 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, AIM ETF Products is 11.02 times less risky than Direxion Daily. It trades about 0.28 of its potential returns per unit of risk. Direxion Daily SP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  996.00  in Direxion Daily SP on May 15, 2025 and sell it today you would earn a total of  42.00  from holding Direxion Daily SP or generate 4.22% return on investment over 90 days.

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

AIM ETF Products  vs.  Direxion Daily SP

AIM ETF Products

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AIM ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Direxion Daily SP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with AIM ETF and Direxion Daily

The main advantage of trading using opposite AIM ETF and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF 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 AIM ETF Products and Direxion Daily SP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.