Correlation Between Direxion Daily and KFA Value
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and KFA Value 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 KFA Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Retail and KFA Value Line, you can compare the effects of market volatilities on Direxion Daily and KFA Value 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 KFA Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and KFA Value.
Diversification Opportunities for Direxion Daily and KFA Value
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and KFA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Retail and KFA Value Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Value Line 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 Retail are associated (or correlated) with KFA Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Value Line has no effect on the direction of Direxion Daily i.e., Direxion Daily and KFA Value go up and down completely randomly.
Pair Corralation between Direxion Daily and KFA Value
Given the investment horizon of 90 days Direxion Daily Retail is expected to under-perform the KFA Value. In addition to that, Direxion Daily is 7.09 times more volatile than KFA Value Line. It trades about -0.15 of its total potential returns per unit of risk. KFA Value Line is currently generating about 0.12 per unit of volatility. If you would invest 2,717 in KFA Value Line on August 15, 2025 and sell it today you would earn a total of 37.00 from holding KFA Value Line or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Retail vs. KFA Value Line
Performance |
| Timeline |
| Direxion Daily Retail |
| KFA Value Line |
Direxion Daily and KFA Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and KFA Value
The main advantage of trading using opposite Direxion Daily and KFA Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, KFA Value 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 KFA Value will offset losses from the drop in KFA Value's long position.| Direxion Daily vs. Direxion Daily FTSE | Direxion Daily vs. First Trust Nasdaq | Direxion Daily vs. Militia LongShort Equity | Direxion Daily vs. ProShares Ultra SmallCap600 |
| KFA Value vs. Nushares ETF Trust | KFA Value vs. ProShares Ultra SmallCap600 | KFA Value vs. iShares MSCI Finland | KFA Value vs. Global X SP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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