Correlation Between Direxion Monthly and Bondbloxx ETF

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

By analyzing existing cross correlation between Direxion Monthly 7 10 and Bondbloxx ETF Trust, you can compare the effects of market volatilities on Direxion Monthly and Bondbloxx ETF 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 Monthly with a short position of Bondbloxx ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Bondbloxx ETF.

Diversification Opportunities for Direxion Monthly and Bondbloxx ETF

0.95

Correlation Coefficient

Direxion Monthly  Bondbloxx ETF

Almost no diversification

The 3 months correlation between Direxion and Bondbloxx is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly 7 10 and Bondbloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bondbloxx ETF Trust and Direxion Monthly 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 Monthly 7 10 are associated (or correlated) with Bondbloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bondbloxx ETF Trust has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Bondbloxx ETF go up and down completely randomly.

Pair Corralation between Direxion Monthly and Bondbloxx ETF

Assuming the 90 days horizon Direxion Monthly 7 10 is expected to generate 0.71 times more return on investment than Bondbloxx ETF. However, Direxion Monthly 7 10 is 1.41 times less risky than Bondbloxx ETF. It trades about -0.01 of its potential returns per unit of risk. Bondbloxx ETF Trust is currently generating about -0.02 per unit of risk. If you would invest  2,077  in Direxion Monthly 7 10 on October 22, 2024 and sell it today you would lose (61.00) from holding Direxion Monthly 7 10 or give up 2.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.56%
Values	Daily Returns

Direxion Monthly 7 10  vs.  Bondbloxx ETF Trust

Direxion Monthly 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Monthly 7 10 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Direxion Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bondbloxx ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bondbloxx ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bondbloxx ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Direxion Monthly and Bondbloxx ETF

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

The idea behind Direxion Monthly 7 10 and Bondbloxx ETF Trust 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.