Correlation Between Direxion Daily and Invesco FTSE
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Invesco FTSE 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 Invesco FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily CSI and Invesco FTSE RAFI, you can compare the effects of market volatilities on Direxion Daily and Invesco FTSE 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 Invesco FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Invesco FTSE.
Diversification Opportunities for Direxion Daily and Invesco FTSE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Invesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily CSI and Invesco FTSE RAFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco FTSE RAFI 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 CSI are associated (or correlated) with Invesco FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco FTSE RAFI has no effect on the direction of Direxion Daily i.e., Direxion Daily and Invesco FTSE go up and down completely randomly.
Pair Corralation between Direxion Daily and Invesco FTSE
Given the investment horizon of 90 days Direxion Daily CSI is expected to under-perform the Invesco FTSE. In addition to that, Direxion Daily is 4.98 times more volatile than Invesco FTSE RAFI. It trades about -0.03 of its total potential returns per unit of risk. Invesco FTSE RAFI is currently generating about -0.02 per unit of volatility. If you would invest 4,064 in Invesco FTSE RAFI on August 22, 2025 and sell it today you would lose (33.00) from holding Invesco FTSE RAFI or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Direxion Daily CSI vs. Invesco FTSE RAFI
Performance |
| Timeline |
| Direxion Daily CSI |
| Invesco FTSE RAFI |
Direxion Daily and Invesco FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Invesco FTSE
The main advantage of trading using opposite Direxion Daily and Invesco FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Invesco FTSE 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 Invesco FTSE will offset losses from the drop in Invesco FTSE's long position.| Direxion Daily vs. ProShares UltraPro Russell2000 | Direxion Daily vs. JPMorgan Diversified Return | Direxion Daily vs. FlexShares Global Quality | Direxion Daily vs. iShares MSCI Sweden |
| Invesco FTSE vs. JPMorgan Diversified Return | Invesco FTSE vs. Goldman Sachs ETF | Invesco FTSE vs. JPMorgan Diversified Return | Invesco FTSE vs. Invesco Exchange Traded |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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