Correlation Between Macquarie Focused and Direxion Daily

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

By analyzing existing cross correlation between Macquarie Focused Emerging and Direxion Daily MSCI, you can compare the effects of market volatilities on Macquarie Focused 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 Macquarie Focused with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Focused and Direxion Daily.

Diversification Opportunities for Macquarie Focused and Direxion Daily

0.92

Correlation Coefficient

Macquarie Focused  Direxion Daily

Almost no diversification

The 3 months correlation between Macquarie and Direxion is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Focused Emerging and Direxion Daily MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily MSCI and Macquarie Focused 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 Macquarie Focused Emerging 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 MSCI has no effect on the direction of Macquarie Focused i.e., Macquarie Focused and Direxion Daily go up and down completely randomly.

Pair Corralation between Macquarie Focused and Direxion Daily

Given the investment horizon of 90 days Macquarie Focused Emerging is expected to generate 0.3 times more return on investment than Direxion Daily. However, Macquarie Focused Emerging is 3.37 times less risky than Direxion Daily. It trades about -0.11 of its potential returns per unit of risk. Direxion Daily MSCI is currently generating about -0.13 per unit of risk. If you would invest  2,696  in Macquarie Focused Emerging on October 12, 2024 and sell it today you would lose (203.00) from holding Macquarie Focused Emerging or give up 7.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Macquarie Focused Emerging  vs.  Direxion Daily MSCI

Macquarie Focused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macquarie Focused Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Direxion Daily MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily MSCI 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with Macquarie Focused and Direxion Daily

The main advantage of trading using opposite Macquarie Focused and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Focused 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 Macquarie Focused Emerging and Direxion Daily MSCI 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 Global Correlations module to find global opportunities by holding instruments from different markets.