Correlation Between Citigroup and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Direxion Daily Travel, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Direxion Daily.
Diversification Opportunities for Citigroup and Direxion Daily
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Direxion is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Direxion Daily Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Travel and Citigroup 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 Citigroup 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 Travel has no effect on the direction of Citigroup i.e., Citigroup and Direxion Daily go up and down completely randomly.
Pair Corralation between Citigroup and Direxion Daily
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.7 times more return on investment than Direxion Daily. However, Citigroup is 1.42 times less risky than Direxion Daily. It trades about 0.12 of its potential returns per unit of risk. Direxion Daily Travel is currently generating about 0.08 per unit of risk. If you would invest 4,004 in Citigroup on September 12, 2024 and sell it today you would earn a total of 3,200 from holding Citigroup or generate 79.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Direxion Daily Travel
Performance |
| Timeline |
| Citigroup |
| Direxion Daily Travel |
Citigroup and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Direxion Daily
The main advantage of trading using opposite Citigroup and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| Direxion Daily vs. Direxion Daily Cloud | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Industrials |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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