Correlation Between Direxion Daily and GraniteShares 175x

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and GraniteShares 175x 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 GraniteShares 175x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily SP and GraniteShares 175x Long, you can compare the effects of market volatilities on Direxion Daily and GraniteShares 175x 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 GraniteShares 175x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and GraniteShares 175x.

Diversification Opportunities for Direxion Daily and GraniteShares 175x

-0.31

Correlation Coefficient

Direxion Daily  GraniteShares 175x

Very good diversification

The 3 months correlation between Direxion and GraniteShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and GraniteShares 175x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 175x Long 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 SP are associated (or correlated) with GraniteShares 175x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 175x Long has no effect on the direction of Direxion Daily i.e., Direxion Daily and GraniteShares 175x go up and down completely randomly.

Pair Corralation between Direxion Daily and GraniteShares 175x

Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the GraniteShares 175x. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily SP is 2.08 times less risky than GraniteShares 175x. The etf trades about -0.17 of its potential returns per unit of risk. The GraniteShares 175x Long is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,129  in GraniteShares 175x Long on December 4, 2024 and sell it today you would earn a total of  1,450  from holding GraniteShares 175x Long or generate 68.11% return on investment over 90 days.

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

Direxion Daily SP  vs.  GraniteShares 175x Long

Direxion Daily SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

GraniteShares 175x Long

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 175x Long are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, GraniteShares 175x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and GraniteShares 175x

The main advantage of trading using opposite Direxion Daily and GraniteShares 175x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, GraniteShares 175x 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 GraniteShares 175x will offset losses from the drop in GraniteShares 175x's long position.

The idea behind Direxion Daily SP and GraniteShares 175x Long 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.