Correlation Between Direxion Daily and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Sterling Capital 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 Sterling Capital 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 Sterling Capital Intermediate, you can compare the effects of market volatilities on Direxion Daily and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Sterling Capital.
Diversification Opportunities for Direxion Daily and Sterling Capital
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Sterling is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Sterling Capital Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Int 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Int has no effect on the direction of Direxion Daily i.e., Direxion Daily and Sterling Capital go up and down completely randomly.
Pair Corralation between Direxion Daily and Sterling Capital
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 15.03 times more return on investment than Sterling Capital. However, Direxion Daily is 15.03 times more volatile than Sterling Capital Intermediate. It trades about 0.32 of its potential returns per unit of risk. Sterling Capital Intermediate is currently generating about 0.14 per unit of risk. If you would invest 5,385 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 1,347 from holding Direxion Daily Mid or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Sterling Capital Intermediate
Performance |
| Timeline |
| Direxion Daily Mid |
| Sterling Capital Int |
Direxion Daily and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Sterling Capital
The main advantage of trading using opposite Direxion Daily and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Oppenheimer Gold Special | Sterling Capital vs. Invesco Gold Special | Sterling Capital vs. Global Gold Fund | Sterling Capital vs. Gamco Global Gold |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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