Correlation Between Direxion Daily and Overseas Series

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

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

Diversification Opportunities for Direxion Daily and Overseas Series

-0.3

Correlation Coefficient

Direxion Daily  Overseas Series

Very good diversification

The 3 months correlation between Direxion and Overseas is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Overseas Series Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overseas Series Class 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 Mid are associated (or correlated) with Overseas Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overseas Series Class has no effect on the direction of Direxion Daily i.e., Direxion Daily and Overseas Series go up and down completely randomly.

Pair Corralation between Direxion Daily and Overseas Series

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Overseas Series. In addition to that, Direxion Daily is 3.59 times more volatile than Overseas Series Class. It trades about -0.1 of its total potential returns per unit of risk. Overseas Series Class is currently generating about 0.09 per unit of volatility. If you would invest  3,214  in Overseas Series Class on December 30, 2024 and sell it today you would earn a total of  160.00  from holding Overseas Series Class or generate 4.98% return on investment over 90 days.

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

Direxion Daily Mid  vs.  Overseas Series Class

Direxion Daily Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Mid 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 fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Overseas Series Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Overseas Series Class are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Overseas Series 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 Overseas Series

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

The idea behind Direxion Daily Mid and Overseas Series Class 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..