Correlation Between Direxion Daily and SonicShares Global

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

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

Diversification Opportunities for Direxion Daily and SonicShares Global

-0.84

Correlation Coefficient

Direxion Daily  SonicShares Global

Pay attention - limited upside

The 3 months correlation between Direxion and SonicShares is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Travel and SonicShares Global Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SonicShares Global 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 Travel are associated (or correlated) with SonicShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SonicShares Global has no effect on the direction of Direxion Daily i.e., Direxion Daily and SonicShares Global go up and down completely randomly.

Pair Corralation between Direxion Daily and SonicShares Global

Given the investment horizon of 90 days Direxion Daily Travel is expected to generate 1.6 times more return on investment than SonicShares Global. However, Direxion Daily is 1.6 times more volatile than SonicShares Global Shipping. It trades about 0.12 of its potential returns per unit of risk. SonicShares Global Shipping is currently generating about -0.09 per unit of risk. If you would invest  1,425  in Direxion Daily Travel on September 26, 2024 and sell it today you would earn a total of  559.00  from holding Direxion Daily Travel or generate 39.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Direxion Daily Travel  vs.  SonicShares Global Shipping

Direxion Daily Travel

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Travel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Direxion Daily displayed solid returns over the last few months and may actually be approaching a breakup point.

SonicShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SonicShares Global Shipping 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Direxion Daily and SonicShares Global

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

The idea behind Direxion Daily Travel and SonicShares Global Shipping 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.

Check out your portfolio center.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.