Correlation Between GE Aerospace and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Direxion Daily 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 GE Aerospace and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Direxion Daily NVDA, you can compare the effects of market volatilities on GE Aerospace and Direxion Daily 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 GE Aerospace with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Direxion Daily.
Diversification Opportunities for GE Aerospace and Direxion Daily
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GE Aerospace and Direxion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Direxion Daily NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily NVDA and GE Aerospace 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 GE Aerospace are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily NVDA has no effect on the direction of GE Aerospace i.e., GE Aerospace and Direxion Daily go up and down completely randomly.
Pair Corralation between GE Aerospace and Direxion Daily
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.54 times more return on investment than Direxion Daily. However, GE Aerospace is 1.84 times less risky than Direxion Daily. It trades about 0.13 of its potential returns per unit of risk. Direxion Daily NVDA is currently generating about -0.1 per unit of risk. If you would invest 6,882 in GE Aerospace on November 27, 2024 and sell it today you would earn a total of 12,989 from holding GE Aerospace or generate 188.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.63% |
| Values | Daily Returns |
GE Aerospace vs. Direxion Daily NVDA
Performance |
| Timeline |
| GE Aerospace |
| Direxion Daily NVDA |
GE Aerospace and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Direxion Daily
The main advantage of trading using opposite GE Aerospace and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Direxion Daily 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 Direxion Daily will offset losses from the drop in Direxion Daily's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Direxion Daily vs. Strategy Shares | Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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