Correlation Between Direxion Daily and CITIC Securities
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and CITIC Securities 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 CITIC Securities 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 CITIC Securities Co, you can compare the effects of market volatilities on Direxion Daily and CITIC Securities 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 CITIC Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and CITIC Securities.
Diversification Opportunities for Direxion Daily and CITIC Securities
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and CITIC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and CITIC Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Securities 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 CITIC Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Securities has no effect on the direction of Direxion Daily i.e., Direxion Daily and CITIC Securities go up and down completely randomly.
Pair Corralation between Direxion Daily and CITIC Securities
Given the investment horizon of 90 days Direxion Daily is expected to generate 2.11 times less return on investment than CITIC Securities. But when comparing it to its historical volatility, Direxion Daily Mid is 2.53 times less risky than CITIC Securities. It trades about 0.05 of its potential returns per unit of risk. CITIC Securities Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,818 in CITIC Securities Co on September 12, 2024 and sell it today you would earn a total of 1,200 from holding CITIC Securities Co or generate 66.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Direxion Daily Mid vs. CITIC Securities Co
Performance |
| Timeline |
| Direxion Daily Mid |
| CITIC Securities |
Direxion Daily and CITIC Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and CITIC Securities
The main advantage of trading using opposite Direxion Daily and CITIC Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, CITIC Securities 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 CITIC Securities will offset losses from the drop in CITIC Securities' 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 |
| CITIC Securities vs. SPENN Technology AS | CITIC Securities vs. Arcane Crypto AB | CITIC Securities vs. OFX Group Ltd | CITIC Securities vs. HUMANA INC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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