Correlation Between IShares 0 and Direxion Daily

Can any of the company-specific risk be diversified away by investing in both IShares 0 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 IShares 0 and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 0 5 Year and Direxion Daily Technology, you can compare the effects of market volatilities on IShares 0 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 IShares 0 with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and Direxion Daily.

Diversification Opportunities for IShares 0 and Direxion Daily

-0.87

Correlation Coefficient

IShares 0  Direxion Daily

Pay attention - limited upside

The 3 months correlation between IShares and Direxion is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding iShares 0 5 Year and Direxion Daily Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Technology and IShares 0 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 iShares 0 5 Year 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 Technology has no effect on the direction of IShares 0 i.e., IShares 0 and Direxion Daily go up and down completely randomly.

Pair Corralation between IShares 0 and Direxion Daily

Given the investment horizon of 90 days iShares 0 5 Year is expected to generate 0.02 times more return on investment than Direxion Daily. However, iShares 0 5 Year is 50.26 times less risky than Direxion Daily. It trades about 0.22 of its potential returns per unit of risk. Direxion Daily Technology is currently generating about -0.02 per unit of risk. If you would invest  10,026  in iShares 0 5 Year on February 3, 2025 and sell it today you would earn a total of  228.00  from holding iShares 0 5 Year or generate 2.27% return on investment over 90 days.

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

iShares 0 5 Year  vs.  Direxion Daily Technology

iShares 0 5

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 5 Year are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, IShares 0 is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Direxion Daily Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with IShares 0 and Direxion Daily

The main advantage of trading using opposite IShares 0 and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 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 iShares 0 5 Year and Direxion Daily Technology 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.