Correlation Between Direxion Daily and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Thyssenkrupp 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 Thyssenkrupp 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 Thyssenkrupp AG ON, you can compare the effects of market volatilities on Direxion Daily and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Thyssenkrupp.
Diversification Opportunities for Direxion Daily and Thyssenkrupp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Thyssenkrupp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Thyssenkrupp AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thyssenkrupp AG ON 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thyssenkrupp AG ON has no effect on the direction of Direxion Daily i.e., Direxion Daily and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Direxion Daily and Thyssenkrupp
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Thyssenkrupp. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.09 times less risky than Thyssenkrupp. The etf trades about -0.07 of its potential returns per unit of risk. The Thyssenkrupp AG ON is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Thyssenkrupp AG ON on September 12, 2024 and sell it today you would earn a total of 83.00 from holding Thyssenkrupp AG ON or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Daily Mid vs. Thyssenkrupp AG ON
Performance |
| Timeline |
| Direxion Daily Mid |
| Thyssenkrupp AG ON |
Direxion Daily and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Thyssenkrupp
The main advantage of trading using opposite Direxion Daily and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp'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 |
| Thyssenkrupp vs. Batm Advanced Communications | Thyssenkrupp vs. United Internet AG | Thyssenkrupp vs. Verizon Communications | Thyssenkrupp vs. PureTech Health plc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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