Correlation Between IShares Equity and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both IShares Equity and Direxion Shares 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 Equity and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Equity Factor and Direxion Shares ETF, you can compare the effects of market volatilities on IShares Equity and Direxion Shares 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 Equity with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Equity and Direxion Shares.
Diversification Opportunities for IShares Equity and Direxion Shares
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and Direxion is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Equity Factor and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and IShares Equity 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 Equity Factor are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of IShares Equity i.e., IShares Equity and Direxion Shares go up and down completely randomly.
Pair Corralation between IShares Equity and Direxion Shares
Given the investment horizon of 90 days iShares Equity Factor is expected to generate 0.22 times more return on investment than Direxion Shares. However, iShares Equity Factor is 4.53 times less risky than Direxion Shares. It trades about 0.2 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.04 per unit of risk. If you would invest 6,237 in iShares Equity Factor on June 10, 2025 and sell it today you would earn a total of 484.00 from holding iShares Equity Factor or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Equity Factor vs. Direxion Shares ETF
Performance |
| Timeline |
| iShares Equity Factor |
| Direxion Shares ETF |
IShares Equity and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Equity and Direxion Shares
The main advantage of trading using opposite IShares Equity and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Equity position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.| IShares Equity vs. Vanguard Total Stock | IShares Equity vs. SPDR SP 500 | IShares Equity vs. iShares Core SP | IShares Equity vs. Vanguard Dividend Appreciation |
| Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. AXS TSLA Bear |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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