Correlation Between Direxion Daily and Marketwise

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Marketwise 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 Marketwise 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 Marketwise, you can compare the effects of market volatilities on Direxion Daily and Marketwise 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 Marketwise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Marketwise.

Diversification Opportunities for Direxion Daily and Marketwise

-0.18

Correlation Coefficient

Direxion Daily  Marketwise

Good diversification

The 3 months correlation between Direxion and Marketwise is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Marketwise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketwise 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 Marketwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketwise has no effect on the direction of Direxion Daily i.e., Direxion Daily and Marketwise go up and down completely randomly.

Pair Corralation between Direxion Daily and Marketwise

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Marketwise. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.95 times less risky than Marketwise. The etf trades about -0.1 of its potential returns per unit of risk. The Marketwise is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Marketwise on December 30, 2024 and sell it today you would lose (5.00) from holding Marketwise or give up 9.09% of portfolio value over 90 days.

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

Direxion Daily Mid  vs.  Marketwise

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.

Marketwise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marketwise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Marketwise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Direxion Daily and Marketwise

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

The idea behind Direxion Daily Mid and Marketwise 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.