Correlation Between Direxion Monthly and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Direxion Monthly and Washington Mutual 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 Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Monthly Sp and Washington Mutual Investors, you can compare the effects of market volatilities on Direxion Monthly and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Washington Mutual.
Diversification Opportunities for Direxion Monthly and Washington Mutual
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Washington is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Sp and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Sp are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Washington Mutual go up and down completely randomly.
Pair Corralation between Direxion Monthly and Washington Mutual
Assuming the 90 days horizon Direxion Monthly Sp is expected to under-perform the Washington Mutual. In addition to that, Direxion Monthly is 4.76 times more volatile than Washington Mutual Investors. It trades about -0.13 of its total potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.05 per unit of volatility. If you would invest 6,512 in Washington Mutual Investors on September 13, 2024 and sell it today you would lose (32.00) from holding Washington Mutual Investors or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Monthly Sp vs. Washington Mutual Investors
Performance |
| Timeline |
| Direxion Monthly |
| Washington Mutual |
Direxion Monthly and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Monthly and Washington Mutual
The main advantage of trading using opposite Direxion Monthly and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Monthly position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Ultra Nasdaq 100 Profunds | Direxion Monthly vs. Aquagold International |
| Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. Investment Of America |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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