Correlation Between GraniteShares 125x and Direxion Daily

Can any of the company-specific risk be diversified away by investing in both GraniteShares 125x and Direxion Daily 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 GraniteShares 125x and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 125x Long and Direxion Daily SP500, you can compare the effects of market volatilities on GraniteShares 125x and Direxion Daily 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 GraniteShares 125x with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares 125x and Direxion Daily.

Diversification Opportunities for GraniteShares 125x and Direxion Daily

0.59

Correlation Coefficient

GraniteShares 125x  Direxion Daily

Very weak diversification

The 3 months correlation between GraniteShares and Direxion is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 125x Long and Direxion Daily SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP500 and GraniteShares 125x 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 GraniteShares 125x Long are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP500 has no effect on the direction of GraniteShares 125x i.e., GraniteShares 125x and Direxion Daily go up and down completely randomly.

Pair Corralation between GraniteShares 125x and Direxion Daily

Considering the 90-day investment horizon GraniteShares 125x Long is expected to generate 1.93 times more return on investment than Direxion Daily. However, GraniteShares 125x is 1.93 times more volatile than Direxion Daily SP500. It trades about 0.07 of its potential returns per unit of risk. Direxion Daily SP500 is currently generating about 0.08 per unit of risk. If you would invest  618.00  in GraniteShares 125x Long on October 13, 2024 and sell it today you would earn a total of  1,134  from holding GraniteShares 125x Long or generate 183.5% return on investment over 90 days.

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

GraniteShares 125x Long  vs.  Direxion Daily SP500

GraniteShares 125x Long

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 125x Long are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, GraniteShares 125x disclosed solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily SP500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily SP500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Direxion Daily is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with GraniteShares 125x and Direxion Daily

The main advantage of trading using opposite GraniteShares 125x and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares 125x position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.

The idea behind GraniteShares 125x Long and Direxion Daily SP500 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.