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 Bond and Direxion Daily 7 10, 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

-0.93

Correlation Coefficient

Vanguard Total  Direxion Daily

Pay attention - limited upside

The 3 months correlation between Vanguard and Direxion is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Direxion Daily 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily 7 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 Bond 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 7 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 7.8 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Vanguard Total Bond is 3.79 times less risky than Direxion Daily. It trades about 0.03 of its potential returns per unit of risk. Direxion Daily 7 10 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,384  in Direxion Daily 7 10 on October 22, 2024 and sell it today you would earn a total of  116.00  from holding Direxion Daily 7 10 or generate 8.38% return on investment over 90 days.

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

Vanguard Total Bond  vs.  Direxion Daily 7 10

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Direxion Daily 7

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily 7 10 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in February 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 Bond and Direxion Daily 7 10 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.