Correlation Between Direxion Daily and Highlight Tech
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Highlight Tech 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 Highlight Tech 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 Highlight Tech, you can compare the effects of market volatilities on Direxion Daily and Highlight Tech 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 Highlight Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Highlight Tech.
Diversification Opportunities for Direxion Daily and Highlight Tech
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Highlight is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Highlight Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Tech 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 Highlight Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Tech has no effect on the direction of Direxion Daily i.e., Direxion Daily and Highlight Tech go up and down completely randomly.
Pair Corralation between Direxion Daily and Highlight Tech
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.31 times more return on investment than Highlight Tech. However, Direxion Daily is 1.31 times more volatile than Highlight Tech. It trades about 0.07 of its potential returns per unit of risk. Highlight Tech is currently generating about 0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 98.66% |
| Values | Daily Returns |
Direxion Daily Mid vs. Highlight Tech
Performance |
| Timeline |
| Direxion Daily Mid |
| Highlight Tech |
Direxion Daily and Highlight Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Highlight Tech
The main advantage of trading using opposite Direxion Daily and Highlight Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Highlight Tech 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 Highlight Tech will offset losses from the drop in Highlight Tech'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 |
| Highlight Tech vs. WiseChip Semiconductor | Highlight Tech vs. Novatek Microelectronics Corp | Highlight Tech vs. Leader Electronics | Highlight Tech vs. Information Technology Total |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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