Correlation Between Direxion Daily and Alpha HPA
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Alpha HPA 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 Alpha HPA 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 Alpha HPA, you can compare the effects of market volatilities on Direxion Daily and Alpha HPA 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 Alpha HPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Alpha HPA.
Diversification Opportunities for Direxion Daily and Alpha HPA
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Alpha is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Alpha HPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha HPA 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 Alpha HPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha HPA has no effect on the direction of Direxion Daily i.e., Direxion Daily and Alpha HPA go up and down completely randomly.
Pair Corralation between Direxion Daily and Alpha HPA
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.93 times more return on investment than Alpha HPA. However, Direxion Daily Mid is 1.08 times less risky than Alpha HPA. It trades about 0.05 of its potential returns per unit of risk. Alpha HPA is currently generating about 0.04 per unit of risk. If you would invest 3,781 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,951 from holding Direxion Daily Mid or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Alpha HPA
Performance |
| Timeline |
| Direxion Daily Mid |
| Alpha HPA |
Direxion Daily and Alpha HPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Alpha HPA
The main advantage of trading using opposite Direxion Daily and Alpha HPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Alpha HPA 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 Alpha HPA will offset losses from the drop in Alpha HPA'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 |
| Alpha HPA vs. Magellan Financial Group | Alpha HPA vs. Black Rock Mining | Alpha HPA vs. Alto Metals | Alpha HPA vs. Prime Financial Group |
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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