Correlation Between Ultimus Managers and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Ultimus Managers 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 Ultimus Managers and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultimus Managers Trust and Direxion Daily SP, you can compare the effects of market volatilities on Ultimus Managers 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 Ultimus Managers with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultimus Managers and Direxion Daily.
Diversification Opportunities for Ultimus Managers and Direxion Daily
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ultimus and Direxion is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and Ultimus Managers 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 Ultimus Managers Trust 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 SP has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and Direxion Daily go up and down completely randomly.
Pair Corralation between Ultimus Managers and Direxion Daily
Given the investment horizon of 90 days Ultimus Managers Trust is expected to generate 0.27 times more return on investment than Direxion Daily. However, Ultimus Managers Trust is 3.77 times less risky than Direxion Daily. It trades about 0.4 of its potential returns per unit of risk. Direxion Daily SP is currently generating about -0.27 per unit of risk. If you would invest 2,586 in Ultimus Managers Trust on August 28, 2024 and sell it today you would earn a total of 195.00 from holding Ultimus Managers Trust or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultimus Managers Trust vs. Direxion Daily SP
Performance |
| Timeline |
| Ultimus Managers Trust |
| Direxion Daily SP |
Ultimus Managers and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultimus Managers and Direxion Daily
The main advantage of trading using opposite Ultimus Managers and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultimus Managers 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.| Ultimus Managers vs. First Trust Exchange Traded | Ultimus Managers vs. Horizon Kinetics Medical | Ultimus Managers vs. Harbor Health Care | Ultimus Managers vs. American Beacon Select |
| Direxion Daily vs. First Trust Exchange Traded | Direxion Daily vs. Ultimus Managers Trust | Direxion Daily vs. Horizon Kinetics Medical | Direxion Daily vs. Harbor Health Care |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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