Correlation Between AmeraMex International and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both AmeraMex International 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 AmeraMex International and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Direxion Daily FTSE, you can compare the effects of market volatilities on AmeraMex International 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 AmeraMex International with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Direxion Daily.
Diversification Opportunities for AmeraMex International and Direxion Daily
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AmeraMex and Direxion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Direxion Daily FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily FTSE and AmeraMex International 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 AmeraMex International 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 FTSE has no effect on the direction of AmeraMex International i.e., AmeraMex International and Direxion Daily go up and down completely randomly.
Pair Corralation between AmeraMex International and Direxion Daily
Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Direxion Daily. In addition to that, AmeraMex International is 4.67 times more volatile than Direxion Daily FTSE. It trades about -0.1 of its total potential returns per unit of risk. Direxion Daily FTSE is currently generating about -0.1 per unit of volatility. If you would invest 2,436 in Direxion Daily FTSE on September 1, 2024 and sell it today you would lose (168.00) from holding Direxion Daily FTSE or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Direxion Daily FTSE
Performance |
| Timeline |
| AmeraMex International |
| Direxion Daily FTSE |
AmeraMex International and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Direxion Daily
The main advantage of trading using opposite AmeraMex International and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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.| AmeraMex International vs. American Premium Water | AmeraMex International vs. Arts Way Manufacturing Co | AmeraMex International vs. Astec Industries | AmeraMex International vs. Alamo Group |
| Direxion Daily vs. Direxion Daily South | Direxion Daily vs. Direxion Daily Mid | Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily MSCI |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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