Correlation Between Direxion Daily and Alucon Public
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Alucon Public 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 Alucon Public 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 Alucon Public, you can compare the effects of market volatilities on Direxion Daily and Alucon Public 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 Alucon Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Alucon Public.
Diversification Opportunities for Direxion Daily and Alucon Public
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Alucon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Alucon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alucon Public 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 Alucon Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alucon Public has no effect on the direction of Direxion Daily i.e., Direxion Daily and Alucon Public go up and down completely randomly.
Pair Corralation between Direxion Daily and Alucon Public
Given the investment horizon of 90 days Direxion Daily is expected to generate 13.47 times less return on investment than Alucon Public. But when comparing it to its historical volatility, Direxion Daily Mid is 17.59 times less risky than Alucon Public. It trades about 0.06 of its potential returns per unit of risk. Alucon Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,503 in Alucon Public on September 12, 2024 and sell it today you would lose (653.00) from holding Alucon Public or give up 3.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.05% |
| Values | Daily Returns |
Direxion Daily Mid vs. Alucon Public
Performance |
| Timeline |
| Direxion Daily Mid |
| Alucon Public |
Direxion Daily and Alucon Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Alucon Public
The main advantage of trading using opposite Direxion Daily and Alucon Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Alucon Public 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 Alucon Public will offset losses from the drop in Alucon Public'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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