Correlation Between Direxion Daily and Aju IB
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Aju IB 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 Aju IB 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 Aju IB Investment, you can compare the effects of market volatilities on Direxion Daily and Aju IB 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 Aju IB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Aju IB.
Diversification Opportunities for Direxion Daily and Aju IB
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Aju is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Aju IB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aju IB Investment 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 Aju IB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aju IB Investment has no effect on the direction of Direxion Daily i.e., Direxion Daily and Aju IB go up and down completely randomly.
Pair Corralation between Direxion Daily and Aju IB
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.87 times more return on investment than Aju IB. However, Direxion Daily Mid is 1.15 times less risky than Aju IB. It trades about 0.07 of its potential returns per unit of risk. Aju IB Investment is currently generating about 0.03 per unit of risk. If you would invest 3,707 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 3,025 from holding Direxion Daily Mid or generate 81.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.58% |
| Values | Daily Returns |
Direxion Daily Mid vs. Aju IB Investment
Performance |
| Timeline |
| Direxion Daily Mid |
| Aju IB Investment |
Direxion Daily and Aju IB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Aju IB
The main advantage of trading using opposite Direxion Daily and Aju IB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Aju IB 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 Aju IB will offset losses from the drop in Aju IB'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 |
| Aju IB vs. Atinum Investment Co | Aju IB vs. SBI Investment KOREA | Aju IB vs. Busan Industrial Co | Aju IB vs. UNISEM Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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