Correlation Between Direxion Daily and Victory Global

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

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

Diversification Opportunities for Direxion Daily and Victory Global

-0.46

Correlation Coefficient

Direxion Daily  Victory Global

Very good diversification

The 3 months correlation between Direxion and Victory is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Victory Global Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Global Natural 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 FTSE are associated (or correlated) with Victory Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Global Natural has no effect on the direction of Direxion Daily i.e., Direxion Daily and Victory Global go up and down completely randomly.

Pair Corralation between Direxion Daily and Victory Global

Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 2.04 times more return on investment than Victory Global. However, Direxion Daily is 2.04 times more volatile than Victory Global Natural. It trades about 0.19 of its potential returns per unit of risk. Victory Global Natural is currently generating about -0.03 per unit of risk. If you would invest  2,037  in Direxion Daily FTSE on December 30, 2024 and sell it today you would earn a total of  726.00  from holding Direxion Daily FTSE or generate 35.64% return on investment over 90 days.

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

Direxion Daily FTSE  vs.  Victory Global Natural

Direxion Daily FTSE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily FTSE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Direxion Daily disclosed solid returns over the last few months and may actually be approaching a breakup point.

Victory Global Natural

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Direxion Daily and Victory Global

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

The idea behind Direxion Daily FTSE and Victory Global Natural 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.