Correlation Between Direxion Monthly and Franklin Government
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Franklin Government 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 Monthly and Franklin Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly 7 10 and Franklin Government Money, you can compare the effects of market volatilities on Direxion Monthly and Franklin Government 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 Monthly with a short position of Franklin Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Franklin Government.
Diversification Opportunities for Direxion Monthly and Franklin Government
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Franklin is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly 7 10 and Franklin Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government Money and Direxion Monthly 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 Monthly 7 10 are associated (or correlated) with Franklin Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government Money has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Franklin Government go up and down completely randomly.
Pair Corralation between Direxion Monthly and Franklin Government
If you would invest 2,387 in Direxion Monthly 7 10 on September 5, 2024 and sell it today you would earn a total of 22.00 from holding Direxion Monthly 7 10 or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Direxion Monthly 7 10 vs. Franklin Government Money
Performance |
| Timeline |
| Direxion Monthly 7 |
| Franklin Government Money |
Direxion Monthly and Franklin Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Franklin Government
The main advantage of trading using opposite Direxion Monthly and Franklin Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Franklin Government 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 Franklin Government will offset losses from the drop in Franklin Government's long position.| Direxion Monthly vs. Franklin Government Money | Direxion Monthly vs. Prudential Government Money | Direxion Monthly vs. Blackrock Exchange Portfolio | Direxion Monthly vs. General Money Market |
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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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