Correlation Between Direxion Daily and Academies Australasia
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Academies Australasia 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 Academies Australasia 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 Academies Australasia Group, you can compare the effects of market volatilities on Direxion Daily and Academies Australasia 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 Academies Australasia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Academies Australasia.
Diversification Opportunities for Direxion Daily and Academies Australasia
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Academies is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Academies Australasia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academies Australasia 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 Academies Australasia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academies Australasia has no effect on the direction of Direxion Daily i.e., Direxion Daily and Academies Australasia go up and down completely randomly.
Pair Corralation between Direxion Daily and Academies Australasia
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.58 times more return on investment than Academies Australasia. However, Direxion Daily Mid is 1.72 times less risky than Academies Australasia. It trades about 0.05 of its potential returns per unit of risk. Academies Australasia Group is currently generating about -0.04 per unit of risk. If you would invest 4,376 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 1,892 from holding Direxion Daily Mid or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Direxion Daily Mid vs. Academies Australasia Group
Performance |
| Timeline |
| Direxion Daily Mid |
| Academies Australasia |
Direxion Daily and Academies Australasia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Academies Australasia
The main advantage of trading using opposite Direxion Daily and Academies Australasia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Academies Australasia 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 Academies Australasia will offset losses from the drop in Academies Australasia'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 |
| Academies Australasia vs. Perseus Mining | Academies Australasia vs. Sonic Healthcare | Academies Australasia vs. Dexus Convenience Retail | Academies Australasia vs. Dalaroo Metals |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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