Correlation Between Direxion Daily and CK Infrastructure
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and CK Infrastructure 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 CK Infrastructure 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 CK Infrastructure Holdings, you can compare the effects of market volatilities on Direxion Daily and CK Infrastructure 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 CK Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and CK Infrastructure.
Diversification Opportunities for Direxion Daily and CK Infrastructure
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and CHH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and CK Infrastructure Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Infrastructure 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 CK Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Infrastructure has no effect on the direction of Direxion Daily i.e., Direxion Daily and CK Infrastructure go up and down completely randomly.
Pair Corralation between Direxion Daily and CK Infrastructure
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.94 times more return on investment than CK Infrastructure. However, Direxion Daily is 1.94 times more volatile than CK Infrastructure Holdings. It trades about 0.32 of its potential returns per unit of risk. CK Infrastructure Holdings is currently generating about 0.03 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 Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Direxion Daily Mid vs. CK Infrastructure Holdings
Performance |
| Timeline |
| Direxion Daily Mid |
| CK Infrastructure |
Direxion Daily and CK Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and CK Infrastructure
The main advantage of trading using opposite Direxion Daily and CK Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, CK Infrastructure 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 CK Infrastructure will offset losses from the drop in CK Infrastructure'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 |
| CK Infrastructure vs. Sumitomo Rubber Industries | CK Infrastructure vs. NorAm Drilling AS | CK Infrastructure vs. G III Apparel Group | CK Infrastructure vs. RYU Apparel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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