Correlation Between Direxion Daily and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Fubon NASDAQ 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 Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Direxion Daily and Fubon NASDAQ 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 Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Fubon NASDAQ.
Diversification Opportunities for Direxion Daily and Fubon NASDAQ
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Fubon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Fubon NASDAQ 100 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NASDAQ 100 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 Mid are associated (or correlated) with Fubon NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NASDAQ 100 has no effect on the direction of Direxion Daily i.e., Direxion Daily and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Direxion Daily and Fubon NASDAQ
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 2.17 times more return on investment than Fubon NASDAQ. However, Direxion Daily is 2.17 times more volatile than Fubon NASDAQ 100 2X. It trades about 0.32 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.19 per unit of risk. If you would invest 5,385 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 1,347 from holding Direxion Daily Mid or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Direxion Daily Mid vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Direxion Daily Mid |
| Fubon NASDAQ 100 |
Direxion Daily and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Fubon NASDAQ
The main advantage of trading using opposite Direxion Daily and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Fubon NASDAQ 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 Fubon NASDAQ will offset losses from the drop in Fubon NASDAQ's long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
| Fubon NASDAQ vs. Fubon Hang Seng | Fubon NASDAQ vs. Fubon SP Preferred | Fubon NASDAQ vs. Fubon NASDAQ 100 1X | Fubon NASDAQ vs. Fubon TWSE Corporate |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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