Correlation Between Direxion and First Trust
Can any of the company-specific risk be diversified away by investing in both Direxion and First Trust 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 and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion and First Trust Global, you can compare the effects of market volatilities on Direxion and First Trust 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 with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion and First Trust.
Diversification Opportunities for Direxion and First Trust
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion and First Trust Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Global and Direxion 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 are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Global has no effect on the direction of Direxion i.e., Direxion and First Trust go up and down completely randomly.
Pair Corralation between Direxion and First Trust
If you would invest 1,275 in Direxion on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Direxion or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Direxion vs. First Trust Global
Performance |
| Timeline |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Global |
Direxion and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion and First Trust
The main advantage of trading using opposite Direxion and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind Direxion and First Trust Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Trust vs. Invesco Global Clean | First Trust vs. Invesco Solar ETF | First Trust vs. First Trust NASDAQ | First Trust vs. Invesco WilderHill Clean |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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