Correlation Between Direxion Daily and AdvisorShares

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

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

Diversification Opportunities for Direxion Daily and AdvisorShares

-0.91

Correlation Coefficient

Direxion Daily  AdvisorShares

Pay attention - limited upside

The 3 months correlation between Direxion and AdvisorShares is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Dow and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares 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 Dow are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of Direxion Daily i.e., Direxion Daily and AdvisorShares go up and down completely randomly.

Pair Corralation between Direxion Daily and AdvisorShares

If you would invest  2,443  in AdvisorShares on September 19, 2024 and sell it today you would earn a total of  0.00  from holding AdvisorShares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Direxion Daily Dow  vs.  AdvisorShares

Direxion Daily Dow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily Dow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's fundamental drivers 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.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AdvisorShares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Direxion Daily and AdvisorShares

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

The idea behind Direxion Daily Dow and AdvisorShares 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .