Correlation Between Direxion Daily and Barclays Capital

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

By analyzing existing cross correlation between Direxion Daily 20 and Barclays Capital, you can compare the effects of market volatilities on Direxion Daily and Barclays Capital 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Barclays Capital.

Diversification Opportunities for Direxion Daily and Barclays Capital

0.0

Correlation Coefficient

Direxion Daily  Barclays Capital

Pay attention - limited upside

The 3 months correlation between Direxion and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 20 and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 20 are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Direxion Daily i.e., Direxion Daily and Barclays Capital go up and down completely randomly.

Pair Corralation between Direxion Daily and Barclays Capital

If you would invest  2,831  in Direxion Daily 20 on September 21, 2024 and sell it today you would earn a total of  1,070  from holding Direxion Daily 20 or generate 37.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Direxion Daily 20  vs.  Barclays Capital

Direxion Daily 20

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily 20 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Direxion Daily showed solid returns over the last few months and may actually be approaching a breakup point.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Direxion Daily and Barclays Capital

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

The idea behind Direxion Daily 20 and Barclays Capital 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.