Correlation Between First Trust and Direxion Work
Can any of the company-specific risk be diversified away by investing in both First Trust and Direxion Work 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 First Trust and Direxion Work into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust NASDAQ and Direxion Work From, you can compare the effects of market volatilities on First Trust and Direxion Work 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 First Trust with a short position of Direxion Work. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Direxion Work.
Diversification Opportunities for First Trust and Direxion Work
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Direxion is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust NASDAQ and Direxion Work From in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Work From and First Trust 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 First Trust NASDAQ are associated (or correlated) with Direxion Work. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Work From has no effect on the direction of First Trust i.e., First Trust and Direxion Work go up and down completely randomly.
Pair Corralation between First Trust and Direxion Work
Given the investment horizon of 90 days First Trust is expected to generate 1.4 times less return on investment than Direxion Work. In addition to that, First Trust is 1.04 times more volatile than Direxion Work From. It trades about 0.13 of its total potential returns per unit of risk. Direxion Work From is currently generating about 0.19 per unit of volatility. If you would invest 5,526 in Direxion Work From on November 2, 2024 and sell it today you would earn a total of 1,388 from holding Direxion Work From or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
First Trust NASDAQ vs. Direxion Work From
Performance |
| Timeline |
| First Trust NASDAQ |
| Direxion Work From |
First Trust and Direxion Work Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Direxion Work
The main advantage of trading using opposite First Trust and Direxion Work positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Direxion Work 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 Work will offset losses from the drop in Direxion Work's long position.| First Trust vs. Amplify ETF Trust | First Trust vs. Global X Cybersecurity | First Trust vs. iShares Cybersecurity and | First Trust vs. First Trust Cloud |
| Direxion Work vs. ProShares Online Retail | Direxion Work vs. WisdomTree Cloud Computing | Direxion Work vs. Global X Cloud | Direxion Work vs. Global X Telemedicine |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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