Correlation Between Direxion Daily and Xtrackers RREEF

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

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

Diversification Opportunities for Direxion Daily and Xtrackers RREEF

-0.69

Correlation Coefficient

Direxion Daily  Xtrackers RREEF

Excellent diversification

The 3 months correlation between Direxion and Xtrackers is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Gold and Xtrackers RREEF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers RREEF 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 Gold are associated (or correlated) with Xtrackers RREEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers RREEF Global has no effect on the direction of Direxion Daily i.e., Direxion Daily and Xtrackers RREEF go up and down completely randomly.

Pair Corralation between Direxion Daily and Xtrackers RREEF

Given the investment horizon of 90 days Direxion Daily Gold is expected to under-perform the Xtrackers RREEF. In addition to that, Direxion Daily is 3.96 times more volatile than Xtrackers RREEF Global. It trades about -0.03 of its total potential returns per unit of risk. Xtrackers RREEF Global is currently generating about 0.02 per unit of volatility. If you would invest  2,453  in Xtrackers RREEF Global on September 12, 2024 and sell it today you would earn a total of  86.00  from holding Xtrackers RREEF Global or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.82%
Values	Daily Returns

Direxion Daily Gold  vs.  Xtrackers RREEF Global

Direxion Daily Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xtrackers RREEF Global

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Direxion Daily and Xtrackers RREEF

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

The idea behind Direxion Daily Gold and Xtrackers RREEF Global 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.