Correlation Between Direxion Daily and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Barclays Capital 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 Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Aerospace and Barclays Capital, you can compare the effects of market volatilities on Direxion Daily and Barclays Capital 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Barclays Capital.
Diversification Opportunities for Direxion Daily and Barclays Capital
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Barclays is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Aerospace and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Aerospace are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Direxion Daily i.e., Direxion Daily and Barclays Capital go up and down completely randomly.
Pair Corralation between Direxion Daily and Barclays Capital
Given the investment horizon of 90 days Direxion Daily Aerospace is expected to generate 4.13 times more return on investment than Barclays Capital. However, Direxion Daily is 4.13 times more volatile than Barclays Capital. It trades about 0.05 of its potential returns per unit of risk. Barclays Capital is currently generating about -0.08 per unit of risk. If you would invest 1,982 in Direxion Daily Aerospace on January 25, 2024 and sell it today you would earn a total of 512.00 from holding Direxion Daily Aerospace or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 23.48% |
| Values | Daily Returns |
Direxion Daily Aerospace vs. Barclays Capital
Performance |
| Timeline |
| Direxion Daily Aerospace |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Direxion Daily and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Barclays Capital
The main advantage of trading using opposite Direxion Daily and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.| Direxion Daily vs. Direxion Daily Homebuilders | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Regional | Direxion Daily vs. Direxion Daily Industrials |
| Barclays Capital vs. First Trust Global | Barclays Capital vs. UBS AG London | Barclays Capital vs. abrdn Bloomberg All |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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