Correlation Between Direxion Daily and TSMZ
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and TSMZ 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 TSMZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP and TSMZ, you can compare the effects of market volatilities on Direxion Daily and TSMZ 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 TSMZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and TSMZ.
Diversification Opportunities for Direxion Daily and TSMZ
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and TSMZ is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and TSMZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSMZ 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 SP are associated (or correlated) with TSMZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSMZ has no effect on the direction of Direxion Daily i.e., Direxion Daily and TSMZ go up and down completely randomly.
Pair Corralation between Direxion Daily and TSMZ
Given the investment horizon of 90 days Direxion Daily SP is expected to generate 2.15 times more return on investment than TSMZ. However, Direxion Daily is 2.15 times more volatile than TSMZ. It trades about 0.06 of its potential returns per unit of risk. TSMZ is currently generating about -0.07 per unit of risk. If you would invest 7,206 in Direxion Daily SP on August 25, 2024 and sell it today you would earn a total of 4,136 from holding Direxion Daily SP or generate 57.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 15.2% |
| Values | Daily Returns |
Direxion Daily SP vs. TSMZ
Performance |
| Timeline |
| Direxion Daily SP |
| TSMZ |
Direxion Daily and TSMZ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and TSMZ
The main advantage of trading using opposite Direxion Daily and TSMZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, TSMZ 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 TSMZ will offset losses from the drop in TSMZ's long position.| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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