Correlation Between SPDR Barclays and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays 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 SPDR Barclays and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Intermediate and Direxion Daily Technology, you can compare the effects of market volatilities on SPDR Barclays 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 SPDR Barclays with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Direxion Daily.
Diversification Opportunities for SPDR Barclays and Direxion Daily
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPDR and Direxion is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Intermediate 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 SPDR Barclays 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 SPDR Barclays Intermediate 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 SPDR Barclays i.e., SPDR Barclays and Direxion Daily go up and down completely randomly.
Pair Corralation between SPDR Barclays and Direxion Daily
Given the investment horizon of 90 days SPDR Barclays is expected to generate 10.7 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, SPDR Barclays Intermediate is 11.4 times less risky than Direxion Daily. It trades about 0.16 of its potential returns per unit of risk. Direxion Daily Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,008 in Direxion Daily Technology on January 25, 2024 and sell it today you would earn a total of 2,758 from holding Direxion Daily Technology or generate 68.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Intermediate vs. Direxion Daily Technology
Performance |
| Timeline |
| SPDR Barclays Interm |
| Direxion Daily Technology |
SPDR Barclays and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Direxion Daily
The main advantage of trading using opposite SPDR Barclays and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays 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.| SPDR Barclays vs. iShares iBoxx High | SPDR Barclays vs. iShares 1 3 Year | SPDR Barclays vs. iShares TIPS Bond | SPDR Barclays vs. iShares 7 10 Year |
| Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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