Correlation Between Direxion Daily and Eaton Vance

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

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

Diversification Opportunities for Direxion Daily and Eaton Vance

0.14

Correlation Coefficient

Direxion Daily  Eaton Vance

Average diversification

The 3 months correlation between Direxion and Eaton is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Eaton Vance Msschsts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Msschsts 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 Mid are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Msschsts has no effect on the direction of Direxion Daily i.e., Direxion Daily and Eaton Vance go up and down completely randomly.

Pair Corralation between Direxion Daily and Eaton Vance

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 20.15 times more return on investment than Eaton Vance. However, Direxion Daily is 20.15 times more volatile than Eaton Vance Msschsts. It trades about 0.19 of its potential returns per unit of risk. Eaton Vance Msschsts is currently generating about 0.08 per unit of risk. If you would invest  4,925  in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of  1,807  from holding Direxion Daily Mid or generate 36.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Direxion Daily Mid  vs.  Eaton Vance Msschsts

Direxion Daily Mid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eaton Vance Msschsts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Msschsts are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Direxion Daily and Eaton Vance

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

The idea behind Direxion Daily Mid and Eaton Vance Msschsts 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.