Correlation Between Vanguard Total and Direxion Daily

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

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

Diversification Opportunities for Vanguard Total and Direxion Daily

-0.76

Correlation Coefficient

Vanguard Total  Direxion Daily

Pay attention - limited upside

The 3 months correlation between Vanguard and Direxion is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock 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 Vanguard Total 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 Vanguard Total Stock 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 Vanguard Total i.e., Vanguard Total and Direxion Daily go up and down completely randomly.

Pair Corralation between Vanguard Total and Direxion Daily

Considering the 90-day investment horizon Vanguard Total is expected to generate 5.46 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Vanguard Total Stock is 3.7 times less risky than Direxion Daily. It trades about 0.02 of its potential returns per unit of risk. Direxion Daily SP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  724.00  in Direxion Daily SP on March 18, 2025 and sell it today you would earn a total of  13.00  from holding Direxion Daily SP or generate 1.8% return on investment over 90 days.

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

Vanguard Total Stock  vs.  Direxion Daily SP

Vanguard Total Stock

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in July 2025.

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 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Vanguard Total and Direxion Daily

The main advantage of trading using opposite Vanguard Total and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total Stock 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.