Correlation Between Direxion Monthly and Amg Managers
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Amg Managers 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 Amg Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly Nasdaq 100 and Amg Managers Fairpointe, you can compare the effects of market volatilities on Direxion Monthly and Amg Managers 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 Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Amg Managers.
Diversification Opportunities for Direxion Monthly and Amg Managers
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Amg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Amg Managers Fairpointe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Fairpointe 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 Nasdaq 100 are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Fairpointe has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Amg Managers go up and down completely randomly.
Pair Corralation between Direxion Monthly and Amg Managers
Assuming the 90 days horizon Direxion Monthly is expected to generate 1.58 times less return on investment than Amg Managers. In addition to that, Direxion Monthly is 1.99 times more volatile than Amg Managers Fairpointe. It trades about 0.09 of its total potential returns per unit of risk. Amg Managers Fairpointe is currently generating about 0.29 per unit of volatility. If you would invest 2,444 in Amg Managers Fairpointe on August 28, 2024 and sell it today you would earn a total of 150.00 from holding Amg Managers Fairpointe or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Monthly Nasdaq 100 vs. Amg Managers Fairpointe
Performance |
| Timeline |
| Direxion Monthly Nasdaq |
| Amg Managers Fairpointe |
Direxion Monthly and Amg Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Amg Managers
The main advantage of trading using opposite Direxion Monthly and Amg Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Amg Managers 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 Amg Managers will offset losses from the drop in Amg Managers' long position.| Direxion Monthly vs. Direxion Monthly Sp | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Ultra Nasdaq 100 Profunds |
| Amg Managers vs. Champlain Small | Amg Managers vs. Touchstone Small Cap | Amg Managers vs. Tax Managed Mid Small | Amg Managers vs. Kinetics Small Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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