Correlation Between Direxion Daily and Touchstone Small

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

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

Diversification Opportunities for Direxion Daily and Touchstone Small

-0.64

Correlation Coefficient

Direxion Daily  Touchstone Small

Excellent diversification

The 3 months correlation between Direxion and Touchstone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap 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 Semiconductor are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Direxion Daily i.e., Direxion Daily and Touchstone Small go up and down completely randomly.

Pair Corralation between Direxion Daily and Touchstone Small

Given the investment horizon of 90 days Direxion Daily Semiconductor is expected to under-perform the Touchstone Small. In addition to that, Direxion Daily is 4.68 times more volatile than Touchstone Small Cap. It trades about -0.24 of its total potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.08 per unit of volatility. If you would invest  3,546  in Touchstone Small Cap on May 6, 2025 and sell it today you would earn a total of  174.00  from holding Touchstone Small Cap or generate 4.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Direxion Daily Semiconductor  vs.  Touchstone Small Cap

Direxion Daily Semic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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.

Touchstone Small Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Touchstone Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and Touchstone Small

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

The idea behind Direxion Daily Semiconductor and Touchstone Small Cap 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.