Correlation Between SPACE and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Direxion Daily FTSE, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Direxion Daily.
Diversification Opportunities for SPACE and Direxion Daily
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPACE and Direxion is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Direxion Daily FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily FTSE and SPACE 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 SPACE 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 FTSE has no effect on the direction of SPACE i.e., SPACE and Direxion Daily go up and down completely randomly.
Pair Corralation between SPACE and Direxion Daily
Assuming the 90 days horizon SPACE is expected to generate 4.0 times more return on investment than Direxion Daily. However, SPACE is 4.0 times more volatile than Direxion Daily FTSE. It trades about 0.05 of its potential returns per unit of risk. Direxion Daily FTSE is currently generating about 0.03 per unit of risk. If you would invest 17.00 in SPACE on November 27, 2024 and sell it today you would earn a total of 10.00 from holding SPACE or generate 58.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.12% |
| Values | Daily Returns |
SPACE vs. Direxion Daily FTSE
Performance |
| Timeline |
| SPACE |
| Direxion Daily FTSE |
SPACE and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Direxion Daily
The main advantage of trading using opposite SPACE and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and Direxion Daily FTSE 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.| Direxion Daily vs. Direxion Daily South | Direxion Daily vs. Direxion Daily Mid | Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily MSCI |
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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