Correlation Between Direxion Daily and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and WisdomTree China 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 WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily MSCI and WisdomTree China ex State Owned, you can compare the effects of market volatilities on Direxion Daily and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and WisdomTree China.
Diversification Opportunities for Direxion Daily and WisdomTree China
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and WisdomTree is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily MSCI and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 MSCI are associated (or correlated) with WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of Direxion Daily i.e., Direxion Daily and WisdomTree China go up and down completely randomly.
Pair Corralation between Direxion Daily and WisdomTree China
Given the investment horizon of 90 days Direxion Daily is expected to generate 3.13 times less return on investment than WisdomTree China. In addition to that, Direxion Daily is 1.6 times more volatile than WisdomTree China ex State Owned. It trades about 0.04 of its total potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.2 per unit of volatility. If you would invest 3,199 in WisdomTree China ex State Owned on April 23, 2025 and sell it today you would earn a total of 493.00 from holding WisdomTree China ex State Owned or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Direxion Daily MSCI vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| Direxion Daily MSCI |
| WisdomTree China |
Direxion Daily and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and WisdomTree China
The main advantage of trading using opposite Direxion Daily and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, WisdomTree China 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 WisdomTree China will offset losses from the drop in WisdomTree China's long position.| Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily South | Direxion Daily vs. Direxion Daily FTSE | Direxion Daily vs. Direxion Daily MSCI |
| WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |