Correlation Between Direxion Daily and PT Adaro
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and PT Adaro 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 PT Adaro 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 PT Adaro Energy, you can compare the effects of market volatilities on Direxion Daily and PT Adaro 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 PT Adaro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and PT Adaro.
Diversification Opportunities for Direxion Daily and PT Adaro
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and A64 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro Energy 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 PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of Direxion Daily i.e., Direxion Daily and PT Adaro go up and down completely randomly.
Pair Corralation between Direxion Daily and PT Adaro
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.47 times more return on investment than PT Adaro. However, Direxion Daily Mid is 2.11 times less risky than PT Adaro. It trades about 0.28 of its potential returns per unit of risk. PT Adaro Energy is currently generating about -0.22 per unit of risk. If you would invest 5,385 in Direxion Daily Mid on September 5, 2024 and sell it today you would earn a total of 1,235 from holding Direxion Daily Mid or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Daily Mid vs. PT Adaro Energy
Performance |
| Timeline |
| Direxion Daily Mid |
| PT Adaro Energy |
Direxion Daily and PT Adaro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and PT Adaro
The main advantage of trading using opposite Direxion Daily and PT Adaro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, PT Adaro 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 PT Adaro will offset losses from the drop in PT Adaro'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 |
| PT Adaro vs. PT Bayan Resources | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. PT Bumi Resources |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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