Correlation Between Direxion Daily and Clover Leaf
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Clover Leaf 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 Clover Leaf 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 Clover Leaf Capital, you can compare the effects of market volatilities on Direxion Daily and Clover Leaf 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 Clover Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Clover Leaf.
Diversification Opportunities for Direxion Daily and Clover Leaf
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Clover is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Clover Leaf Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Leaf Capital 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 Clover Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Leaf Capital has no effect on the direction of Direxion Daily i.e., Direxion Daily and Clover Leaf go up and down completely randomly.
Pair Corralation between Direxion Daily and Clover Leaf
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.79 times more return on investment than Clover Leaf. However, Direxion Daily is 1.79 times more volatile than Clover Leaf Capital. It trades about 0.05 of its potential returns per unit of risk. Clover Leaf Capital is currently generating about 0.02 per unit of risk. If you would invest 3,830 in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of 2,902 from holding Direxion Daily Mid or generate 75.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.88% |
| Values | Daily Returns |
Direxion Daily Mid vs. Clover Leaf Capital
Performance |
| Timeline |
| Direxion Daily Mid |
| Clover Leaf Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Direxion Daily and Clover Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Clover Leaf
The main advantage of trading using opposite Direxion Daily and Clover Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Clover Leaf 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 Clover Leaf will offset losses from the drop in Clover Leaf'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 |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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