Correlation Between Direxion Daily and Amazon
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on Direxion Daily and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Amazon.
Diversification Opportunities for Direxion Daily and Amazon
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and Amazon is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Direxion Daily i.e., Direxion Daily and Amazon go up and down completely randomly.
Pair Corralation between Direxion Daily and Amazon
Given the investment horizon of 90 days Direxion Daily is expected to generate 2.75 times less return on investment than Amazon. In addition to that, Direxion Daily is 1.12 times more volatile than Amazon Inc. It trades about 0.05 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.16 per unit of volatility. If you would invest 20,950 in Amazon Inc on September 4, 2024 and sell it today you would earn a total of 140,050 from holding Amazon Inc or generate 668.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.18% |
| Values | Daily Returns |
Direxion Daily Mid vs. Amazon Inc
Performance |
| Timeline |
| Direxion Daily Mid |
| Amazon Inc |
Direxion Daily and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Amazon
The main advantage of trading using opposite Direxion Daily and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon'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 |
| Amazon vs. United States Steel | Amazon vs. Compania de Transporte | Amazon vs. Telecom Argentina | Amazon vs. Transportadora de Gas |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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