Correlation Between Direxion Daily and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and LyondellBasell Industries 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 LyondellBasell Industries 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 LyondellBasell Industries NV, you can compare the effects of market volatilities on Direxion Daily and LyondellBasell Industries 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 LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and LyondellBasell Industries.
Diversification Opportunities for Direxion Daily and LyondellBasell Industries
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and LyondellBasell is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries 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 LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of Direxion Daily i.e., Direxion Daily and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between Direxion Daily and LyondellBasell Industries
Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 2.04 times more return on investment than LyondellBasell Industries. However, Direxion Daily is 2.04 times more volatile than LyondellBasell Industries NV. It trades about 0.04 of its potential returns per unit of risk. LyondellBasell Industries NV is currently generating about -0.01 per unit of risk. If you would invest 1,937 in Direxion Daily FTSE on November 27, 2024 and sell it today you would earn a total of 723.00 from holding Direxion Daily FTSE or generate 37.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily FTSE vs. LyondellBasell Industries NV
Performance |
| Timeline |
| Direxion Daily FTSE |
| LyondellBasell Industries |
Direxion Daily and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and LyondellBasell Industries
The main advantage of trading using opposite Direxion Daily and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' 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 |
| LyondellBasell Industries vs. International Flavors Fragrances | LyondellBasell Industries vs. Cabot | LyondellBasell Industries vs. Westlake Chemical | LyondellBasell Industries vs. Air Products and |
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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