diversifiable risk of combining IShares MSCI 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 MSCI Global and Direxion Daily Regional, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Direxion Daily.
Diversification Opportunities for IShares MSCI and Direxion Daily
Pair Corralation between IShares MSCI and Direxion Daily
Given the investment horizon of 90 days IShares MSCI Global is expected to generate 0.16 times more return on investment than Direxion Daily. However, IShares MSCI Global is 6.4 times less risky than Direxion Daily. It trades about 0.0 of its potential returns per unit of risk. Direxion Daily Regional is currently generating about -0.16 per unit of risk. If you would invest 3,586 in IShares MSCI Global on November 24, 2023 and sell it today you would lose (5.00) from holding IShares MSCI Global or give up 0.14% of portfolio value over 90 days.
IShares MSCI Global vs. Direxion Daily Regional
IShares MSCI and Direxion Daily Volatility Contrast
Pair Trading with IShares MSCI and Direxion DailyThe main advantage of trading using opposite IShares MSCI and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI Global and Direxion Daily Regional 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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