Correlation Between Ishares Msci and Direxion Monthly
Can any of the company-specific risk be diversified away by investing in both Ishares Msci and Direxion Monthly 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 Ishares Msci and Direxion Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Msci Eafe and Direxion Monthly Nasdaq 100, you can compare the effects of market volatilities on Ishares Msci and Direxion Monthly 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 Ishares Msci with a short position of Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Msci and Direxion Monthly.
Diversification Opportunities for Ishares Msci and Direxion Monthly
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ishares and Direxion is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Msci Eafe and Direxion Monthly Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly Nasdaq and Ishares Msci 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 Ishares Msci Eafe are associated (or correlated) with Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly Nasdaq has no effect on the direction of Ishares Msci i.e., Ishares Msci and Direxion Monthly go up and down completely randomly.
Pair Corralation between Ishares Msci and Direxion Monthly
Assuming the 90 days horizon Ishares Msci is expected to generate 4.63 times less return on investment than Direxion Monthly. But when comparing it to its historical volatility, Ishares Msci Eafe is 1.64 times less risky than Direxion Monthly. It trades about 0.06 of its potential returns per unit of risk. Direxion Monthly Nasdaq 100 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 9,397 in Direxion Monthly Nasdaq 100 on June 6, 2025 and sell it today you would earn a total of 1,316 from holding Direxion Monthly Nasdaq 100 or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Ishares Msci Eafe vs. Direxion Monthly Nasdaq 100
Performance |
| Timeline |
| Ishares Msci Eafe |
| Direxion Monthly Nasdaq |
Ishares Msci and Direxion Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Msci and Direxion Monthly
The main advantage of trading using opposite Ishares Msci and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Msci position performs unexpectedly, Direxion Monthly 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 Monthly will offset losses from the drop in Direxion Monthly's long position.| Ishares Msci vs. Putnam Money Market | Ishares Msci vs. Ab Government Exchange | Ishares Msci vs. Dws Government Money | Ishares Msci vs. Matson Money Equity |
| Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Direxion Monthly Small | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy |
Check out your portfolio center.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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