Correlation Between Direxion Daily and Metro AG
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on Direxion Daily and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Metro AG.
Diversification Opportunities for Direxion Daily and Metro AG
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and Metro is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Direxion Daily i.e., Direxion Daily and Metro AG go up and down completely randomly.
Pair Corralation between Direxion Daily and Metro AG
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.03 times more return on investment than Metro AG. However, Direxion Daily is 1.03 times more volatile than Metro AG. It trades about 0.05 of its potential returns per unit of risk. Metro AG is currently generating about -0.01 per unit of risk. If you would invest 3,781 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,951 from holding Direxion Daily Mid or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.82% |
| Values | Daily Returns |
Direxion Daily Mid vs. Metro AG
Performance |
| Timeline |
| Direxion Daily Mid |
| Metro AG |
Direxion Daily and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Metro AG
The main advantage of trading using opposite Direxion Daily and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG'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 |
| Metro AG vs. Astral Foods Limited | Metro AG vs. TYSON FOODS A | Metro AG vs. MOLSON RS BEVERAGE | Metro AG vs. Collins Foods Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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