Correlation Between Direxion Daily and VanEck Agribusiness

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and VanEck Agribusiness 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 VanEck Agribusiness into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily Regional and VanEck Agribusiness ETF, you can compare the effects of market volatilities on Direxion Daily and VanEck Agribusiness 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 VanEck Agribusiness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and VanEck Agribusiness.

Diversification Opportunities for Direxion Daily and VanEck Agribusiness

-0.04

Correlation Coefficient

Direxion Daily  VanEck Agribusiness

Good diversification

The 3 months correlation between Direxion and VanEck is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and VanEck Agribusiness ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Agribusiness ETF 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 Regional are associated (or correlated) with VanEck Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Agribusiness ETF has no effect on the direction of Direxion Daily i.e., Direxion Daily and VanEck Agribusiness go up and down completely randomly.

Pair Corralation between Direxion Daily and VanEck Agribusiness

Given the investment horizon of 90 days Direxion Daily Regional is expected to under-perform the VanEck Agribusiness. In addition to that, Direxion Daily is 4.76 times more volatile than VanEck Agribusiness ETF. It trades about -0.05 of its total potential returns per unit of risk. VanEck Agribusiness ETF is currently generating about 0.1 per unit of volatility. If you would invest  6,429  in VanEck Agribusiness ETF on December 29, 2024 and sell it today you would earn a total of  340.00  from holding VanEck Agribusiness ETF or generate 5.29% return on investment over 90 days.

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

Direxion Daily Regional  vs.  VanEck Agribusiness ETF

Direxion Daily Regional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

VanEck Agribusiness ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Agribusiness ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck Agribusiness is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and VanEck Agribusiness

The main advantage of trading using opposite Direxion Daily and VanEck Agribusiness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, VanEck Agribusiness 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 VanEck Agribusiness will offset losses from the drop in VanEck Agribusiness' long position.

The idea behind Direxion Daily Regional and VanEck Agribusiness ETF 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.