Correlation Between Direxion Daily and Octane All
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Octane All 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 Octane All 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 Octane All Cap Value, you can compare the effects of market volatilities on Direxion Daily and Octane All 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 Octane All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Octane All.
Diversification Opportunities for Direxion Daily and Octane All
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Octane is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and Octane All Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octane All Cap 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 Octane All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octane All Cap has no effect on the direction of Direxion Daily i.e., Direxion Daily and Octane All go up and down completely randomly.
Pair Corralation between Direxion Daily and Octane All
Given the investment horizon of 90 days Direxion Daily SP is expected to generate 2.42 times more return on investment than Octane All. However, Direxion Daily is 2.42 times more volatile than Octane All Cap Value. It trades about 0.1 of its potential returns per unit of risk. Octane All Cap Value is currently generating about -0.23 per unit of risk. If you would invest 962.00 in Direxion Daily SP on September 12, 2024 and sell it today you would earn a total of 53.00 from holding Direxion Daily SP or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily SP vs. Octane All Cap Value
Performance |
| Timeline |
| Direxion Daily SP |
| Octane All Cap |
Direxion Daily and Octane All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Octane All
The main advantage of trading using opposite Direxion Daily and Octane All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Octane All 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 Octane All will offset losses from the drop in Octane All's long position.| Direxion Daily vs. Ultimus Managers Trust | Direxion Daily vs. EA Series Trust | Direxion Daily vs. Global X MLP | Direxion Daily vs. ETRACS Quarterly Pay |
| Octane All vs. Ultimus Managers Trust | Octane All vs. Direxion Daily SP | Octane All vs. EA Series Trust | Octane All vs. Global X MLP |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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