Correlation Between Direxion Daily and Barclays Capital

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

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

Diversification Opportunities for Direxion Daily and Barclays Capital

0.0

Correlation Coefficient

Direxion Daily  Barclays Capital

Pay attention - limited upside

The 3 months correlation between Direxion and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Real and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Real are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Direxion Daily i.e., Direxion Daily and Barclays Capital go up and down completely randomly.

Pair Corralation between Direxion Daily and Barclays Capital

If you would invest  940.00  in Direxion Daily Real on September 21, 2024 and sell it today you would lose (22.00) from holding Direxion Daily Real or give up 2.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Direxion Daily Real  vs.  Barclays Capital

Direxion Daily Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Direxion Daily and Barclays Capital

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

The idea behind Direxion Daily Real and Barclays Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.