Correlation Between Direxion Daily and 21S Stellar
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and 21S Stellar 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 21S Stellar 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 21S Stellar, you can compare the effects of market volatilities on Direxion Daily and 21S Stellar 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 21S Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and 21S Stellar.
Diversification Opportunities for Direxion Daily and 21S Stellar
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and 21S is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and 21S Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21S Stellar 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 21S Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21S Stellar has no effect on the direction of Direxion Daily i.e., Direxion Daily and 21S Stellar go up and down completely randomly.
Pair Corralation between Direxion Daily and 21S Stellar
Given the investment horizon of 90 days Direxion Daily is expected to generate 8.75 times less return on investment than 21S Stellar. But when comparing it to its historical volatility, Direxion Daily Mid is 5.77 times less risky than 21S Stellar. It trades about 0.32 of its potential returns per unit of risk. 21S Stellar is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 395.00 in 21S Stellar on September 4, 2024 and sell it today you would earn a total of 1,919 from holding 21S Stellar or generate 485.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Direxion Daily Mid vs. 21S Stellar
Performance |
| Timeline |
| Direxion Daily Mid |
| 21S Stellar |
Direxion Daily and 21S Stellar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and 21S Stellar
The main advantage of trading using opposite Direxion Daily and 21S Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, 21S Stellar 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 21S Stellar will offset losses from the drop in 21S Stellar'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 |
| 21S Stellar vs. Amundi Index Solutions | 21S Stellar vs. Multi Units Luxembourg | 21S Stellar vs. iShares Digital Entertainment |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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