Correlation Between MicroSectors FANG and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Direxion Daily 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 MicroSectors FANG and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG ETN and Direxion Daily Dow, you can compare the effects of market volatilities on MicroSectors FANG and Direxion Daily 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 MicroSectors FANG with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Direxion Daily.
Diversification Opportunities for MicroSectors FANG and Direxion Daily
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and Direxion is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Direxion Daily Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Dow and MicroSectors FANG 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 MicroSectors FANG ETN are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Dow has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Direxion Daily go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Direxion Daily
Given the investment horizon of 90 days MicroSectors FANG is expected to generate 2.16 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, MicroSectors FANG ETN is 2.73 times less risky than Direxion Daily. It trades about 0.12 of its potential returns per unit of risk. Direxion Daily Dow is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,752 in Direxion Daily Dow on June 6, 2025 and sell it today you would earn a total of 431.00 from holding Direxion Daily Dow or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. Direxion Daily Dow
Performance |
| Timeline |
| MicroSectors FANG ETN |
| Direxion Daily Dow |
MicroSectors FANG and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Direxion Daily
The main advantage of trading using opposite MicroSectors FANG and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| MicroSectors FANG vs. iShares Dividend and | MicroSectors FANG vs. Martin Currie Sustainable | MicroSectors FANG vs. AdvisorShares Gerber Kawasaki | MicroSectors FANG vs. Roundhill Ball Metaverse |
| Direxion Daily vs. ProShares Ultra SP500 | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. ProShares Ultra QQQ | Direxion Daily vs. Bank of Montreal |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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