Correlation Between Direxion Daily and Bin Chuan
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Bin Chuan 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 Bin Chuan 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 Bin Chuan Enterprise, you can compare the effects of market volatilities on Direxion Daily and Bin Chuan 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 Bin Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Bin Chuan.
Diversification Opportunities for Direxion Daily and Bin Chuan
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Bin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Bin Chuan Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bin Chuan Enterprise 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 Bin Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bin Chuan Enterprise has no effect on the direction of Direxion Daily i.e., Direxion Daily and Bin Chuan go up and down completely randomly.
Pair Corralation between Direxion Daily and Bin Chuan
Given the investment horizon of 90 days Direxion Daily is expected to generate 3.1 times less return on investment than Bin Chuan. But when comparing it to its historical volatility, Direxion Daily Mid is 1.15 times less risky than Bin Chuan. It trades about 0.09 of its potential returns per unit of risk. Bin Chuan Enterprise is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,385 in Bin Chuan Enterprise on September 12, 2024 and sell it today you would earn a total of 4,465 from holding Bin Chuan Enterprise or generate 187.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Direxion Daily Mid vs. Bin Chuan Enterprise
Performance |
| Timeline |
| Direxion Daily Mid |
| Bin Chuan Enterprise |
Direxion Daily and Bin Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Bin Chuan
The main advantage of trading using opposite Direxion Daily and Bin Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Bin Chuan 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 Bin Chuan will offset losses from the drop in Bin Chuan'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 |
| Bin Chuan vs. Catcher Technology Co | Bin Chuan vs. Solar Applied Materials | Bin Chuan vs. Evergreen Steel Corp | Bin Chuan vs. Shin Zu Shing |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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