Correlation Between Direxion Daily and Virtus Duff

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

Diversification Opportunities for Direxion Daily and Virtus Duff

0.2

Correlation Coefficient

Direxion Daily  Virtus Duff

Modest diversification

The 3 months correlation between Direxion and Virtus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 20 and Virtus Duff Phelps in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Duff Phelps 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 Virtus Duff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Duff Phelps has no effect on the direction of Direxion Daily i.e., Direxion Daily and Virtus Duff go up and down completely randomly.

Pair Corralation between Direxion Daily and Virtus Duff

Considering the 90-day investment horizon Direxion Daily 20 is expected to under-perform the Virtus Duff. In addition to that, Direxion Daily is 2.0 times more volatile than Virtus Duff Phelps. It trades about -0.06 of its total potential returns per unit of risk. Virtus Duff Phelps is currently generating about 0.04 per unit of volatility. If you would invest  1,691  in Virtus Duff Phelps on December 20, 2024 and sell it today you would earn a total of  40.00  from holding Virtus Duff Phelps or generate 2.37% return on investment over 90 days.

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

Direxion Daily 20  vs.  Virtus Duff Phelps

Direxion Daily 20

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily 20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's primary indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Virtus Duff Phelps

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Duff Phelps are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Virtus Duff is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and Virtus Duff

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

The idea behind Direxion Daily 20 and Virtus Duff Phelps 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.