Correlation Between Direxion Daily and Balchem
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Balchem 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 Balchem 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 Balchem, you can compare the effects of market volatilities on Direxion Daily and Balchem 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 Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Balchem.
Diversification Opportunities for Direxion Daily and Balchem
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Balchem is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Direxion Daily i.e., Direxion Daily and Balchem go up and down completely randomly.
Pair Corralation between Direxion Daily and Balchem
Given the investment horizon of 90 days Direxion Daily FTSE is expected to under-perform the Balchem. In addition to that, Direxion Daily is 1.75 times more volatile than Balchem. It trades about -0.1 of its total potential returns per unit of risk. Balchem is currently generating about 0.23 per unit of volatility. If you would invest 16,733 in Balchem on September 1, 2024 and sell it today you would earn a total of 1,319 from holding Balchem or generate 7.88% 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 FTSE vs. Balchem
Performance |
| Timeline |
| Direxion Daily FTSE |
| Balchem |
Direxion Daily and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Balchem
The main advantage of trading using opposite Direxion Daily and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem'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 |
| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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