Correlation Between Invesco SP and Direxion Daily

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Invesco SP 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 Invesco SP and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco SP Global and Direxion Daily Industrials, you can compare the effects of market volatilities on Invesco SP 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 Invesco SP with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco SP and Direxion Daily.

Diversification Opportunities for Invesco SP and Direxion Daily

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Invesco and Direxion is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Invesco SP Global and Direxion Daily Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Indus and Invesco SP 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 Invesco SP Global 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 Indus has no effect on the direction of Invesco SP i.e., Invesco SP and Direxion Daily go up and down completely randomly.

Pair Corralation between Invesco SP and Direxion Daily

Considering the 90-day investment horizon Invesco SP Global is expected to generate 0.37 times more return on investment than Direxion Daily. However, Invesco SP Global is 2.71 times less risky than Direxion Daily. It trades about -0.22 of its potential returns per unit of risk. Direxion Daily Industrials is currently generating about -0.29 per unit of risk. If you would invest  5,537  in Invesco SP Global on January 22, 2024 and sell it today you would lose (203.00) from holding Invesco SP Global or give up 3.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Invesco SP Global  vs.  Direxion Daily Industrials

 Performance 
       Timeline  
Invesco SP Global 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Invesco SP is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Direxion Daily Indus 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Industrials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Direxion Daily disclosed solid returns over the last few months and may actually be approaching a breakup point.

Invesco SP and Direxion Daily Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Invesco SP and Direxion Daily

The main advantage of trading using opposite Invesco SP and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco SP 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 Invesco SP Global and Direxion Daily Industrials 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.
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 Managers module to screen money managers from public funds and ETFs managed around the world.

Other Complementary Tools

Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Transaction History
View history of all your transactions and understand their impact on performance
Equity Valuation
Check real value of public entities based on technical and fundamental data
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges