Correlation Between Direxion Daily and EA Series

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

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

Diversification Opportunities for Direxion Daily and EA Series

0.62

Correlation Coefficient

Direxion Daily  EA Series

Poor diversification

The 3 months correlation between Direxion and STRV is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 NVDA are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Direxion Daily i.e., Direxion Daily and EA Series go up and down completely randomly.

Pair Corralation between Direxion Daily and EA Series

Given the investment horizon of 90 days Direxion Daily NVDA is expected to under-perform the EA Series. In addition to that, Direxion Daily is 7.81 times more volatile than EA Series Trust. It trades about -0.07 of its total potential returns per unit of risk. EA Series Trust is currently generating about -0.08 per unit of volatility. If you would invest  3,793  in EA Series Trust on December 28, 2024 and sell it today you would lose (211.00) from holding EA Series Trust or give up 5.56% of portfolio value over 90 days.

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

Direxion Daily NVDA  vs.  EA Series Trust

Direxion Daily NVDA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily NVDA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

EA Series Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days EA Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EA Series 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 EA Series

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

The idea behind Direxion Daily NVDA and EA Series Trust 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.