Correlation Between Direxion Daily and Harbor Health
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Harbor Health 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 Harbor Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP and Harbor Health Care, you can compare the effects of market volatilities on Direxion Daily and Harbor Health 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 Harbor Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Harbor Health.
Diversification Opportunities for Direxion Daily and Harbor Health
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and Harbor is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and Harbor Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Health Care 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 SP are associated (or correlated) with Harbor Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Health Care has no effect on the direction of Direxion Daily i.e., Direxion Daily and Harbor Health go up and down completely randomly.
Pair Corralation between Direxion Daily and Harbor Health
Given the investment horizon of 90 days Direxion Daily SP is expected to under-perform the Harbor Health. In addition to that, Direxion Daily is 2.9 times more volatile than Harbor Health Care. It trades about -0.27 of its total potential returns per unit of risk. Harbor Health Care is currently generating about -0.08 per unit of volatility. If you would invest 2,705 in Harbor Health Care on August 28, 2024 and sell it today you would lose (57.00) from holding Harbor Health Care or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. Harbor Health Care
Performance |
| Timeline |
| Direxion Daily SP |
| Harbor Health Care |
Direxion Daily and Harbor Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Harbor Health
The main advantage of trading using opposite Direxion Daily and Harbor Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Harbor Health 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 Harbor Health will offset losses from the drop in Harbor Health's long position.| Direxion Daily vs. First Trust Exchange Traded | Direxion Daily vs. Ultimus Managers Trust | Direxion Daily vs. Horizon Kinetics Medical | Direxion Daily vs. Harbor Health Care |
| Harbor Health vs. Horizon Kinetics Medical | Harbor Health vs. Ginkgo Bioworks Holdings | Harbor Health vs. Myriad Genetics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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