Correlation Between Direxion Daily and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Axalta Coating 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 Axalta Coating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily FTSE and Axalta Coating Systems, you can compare the effects of market volatilities on Direxion Daily and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Axalta Coating.
Diversification Opportunities for Direxion Daily and Axalta Coating
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Axalta is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 FTSE are associated (or correlated) with Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Direxion Daily i.e., Direxion Daily and Axalta Coating go up and down completely randomly.
Pair Corralation between Direxion Daily and Axalta Coating
Given the investment horizon of 90 days Direxion Daily FTSE is expected to under-perform the Axalta Coating. In addition to that, Direxion Daily is 2.02 times more volatile than Axalta Coating Systems. It trades about -0.1 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.23 per unit of volatility. If you would invest 3,792 in Axalta Coating Systems on September 1, 2024 and sell it today you would earn a total of 254.00 from holding Axalta Coating Systems or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily FTSE vs. Axalta Coating Systems
Performance |
| Timeline |
| Direxion Daily FTSE |
| Axalta Coating Systems |
Direxion Daily and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Axalta Coating
The main advantage of trading using opposite Direxion Daily and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating's long position.| Direxion Daily vs. Direxion Daily South | Direxion Daily vs. Direxion Daily Mid | Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily MSCI |
| Axalta Coating vs. Linde plc Ordinary | Axalta Coating vs. Air Products and | Axalta Coating vs. Aquagold International | Axalta Coating vs. Thrivent High Yield |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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