Correlation Between Direxion Daily and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Stone Ridge 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 Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily AMZN and Stone Ridge 2050, you can compare the effects of market volatilities on Direxion Daily and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Stone Ridge.
Diversification Opportunities for Direxion Daily and Stone Ridge
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Stone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily AMZN and Stone Ridge 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2050 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 AMZN are associated (or correlated) with Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2050 has no effect on the direction of Direxion Daily i.e., Direxion Daily and Stone Ridge go up and down completely randomly.
Pair Corralation between Direxion Daily and Stone Ridge
Given the investment horizon of 90 days Direxion Daily AMZN is expected to generate 6.9 times more return on investment than Stone Ridge. However, Direxion Daily is 6.9 times more volatile than Stone Ridge 2050. It trades about 0.25 of its potential returns per unit of risk. Stone Ridge 2050 is currently generating about 0.39 per unit of risk. If you would invest 4,291 in Direxion Daily AMZN on November 9, 2024 and sell it today you would earn a total of 613.00 from holding Direxion Daily AMZN or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily AMZN vs. Stone Ridge 2050
Performance |
| Timeline |
| Direxion Daily AMZN |
| Stone Ridge 2050 |
Direxion Daily and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Stone Ridge
The main advantage of trading using opposite Direxion Daily and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Direxion Daily vs. Direxion Daily GOOGL | Direxion Daily vs. Direxion Daily MSFT | Direxion Daily vs. Direxion Shares ETF | Direxion Daily vs. Direxion Daily AMZN |
| Stone Ridge vs. Vanguard Short Term Inflation Protected | Stone Ridge vs. iShares TIPS Bond | Stone Ridge vs. Invesco PureBeta 0 5 | Stone Ridge vs. Goldman Sachs Access |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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