Correlation Between Direxion Daily and China Resources
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and China Resources 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 China Resources 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 China Resources Cement, you can compare the effects of market volatilities on Direxion Daily and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and China Resources.
Diversification Opportunities for Direxion Daily and China Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and China Resources Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Cement 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Cement has no effect on the direction of Direxion Daily i.e., Direxion Daily and China Resources go up and down completely randomly.
Pair Corralation between Direxion Daily and China Resources
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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. China Resources Cement
Performance |
| Timeline |
| Direxion Daily Mid |
| China Resources Cement |
Direxion Daily and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and China Resources
The main advantage of trading using opposite Direxion Daily and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' 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 |
| China Resources vs. Cementos Pacasmayo SAA | China Resources vs. Summit Materials | China Resources vs. Eagle Materials | China Resources vs. CRH PLC ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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