Correlation Between Direxion Daily and Tuttle Capital

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Tuttle Capital 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 Tuttle Capital 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 Tuttle Capital Daily, you can compare the effects of market volatilities on Direxion Daily and Tuttle Capital 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 Tuttle Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Tuttle Capital.

Diversification Opportunities for Direxion Daily and Tuttle Capital

-0.99

Correlation Coefficient

Direxion Daily  Tuttle Capital

Pay attention - limited upside

The 3 months correlation between Direxion and Tuttle is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Tuttle Capital Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuttle Capital Daily 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 Tuttle Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuttle Capital Daily has no effect on the direction of Direxion Daily i.e., Direxion Daily and Tuttle Capital go up and down completely randomly.

Pair Corralation between Direxion Daily and Tuttle Capital

Given the investment horizon of 90 days Direxion Daily Regional is expected to generate 1.52 times more return on investment than Tuttle Capital. However, Direxion Daily is 1.52 times more volatile than Tuttle Capital Daily. It trades about 0.11 of its potential returns per unit of risk. Tuttle Capital Daily is currently generating about -0.11 per unit of risk. If you would invest  9,815  in Direxion Daily Regional on September 14, 2024 and sell it today you would earn a total of  3,950  from holding Direxion Daily Regional or generate 40.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Direxion Daily Regional  vs.  Tuttle Capital Daily

Direxion Daily Regional

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Regional are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tuttle Capital Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuttle Capital Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Direxion Daily and Tuttle Capital

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

The idea behind Direxion Daily Regional and Tuttle Capital Daily 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.