Correlation Between Direxion Daily and 01 Communique
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and 01 Communique 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 01 Communique 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 01 Communique Laboratory, you can compare the effects of market volatilities on Direxion Daily and 01 Communique 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 01 Communique. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and 01 Communique.
Diversification Opportunities for Direxion Daily and 01 Communique
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Direxion and DFK is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and 01 Communique Laboratory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 01 Communique Laboratory 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 01 Communique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 01 Communique Laboratory has no effect on the direction of Direxion Daily i.e., Direxion Daily and 01 Communique go up and down completely randomly.
Pair Corralation between Direxion Daily and 01 Communique
Given the investment horizon of 90 days Direxion Daily is expected to generate 5.45 times less return on investment than 01 Communique. But when comparing it to its historical volatility, Direxion Daily Mid is 8.28 times less risky than 01 Communique. It trades about 0.28 of its potential returns per unit of risk. 01 Communique Laboratory is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2.20 in 01 Communique Laboratory on September 5, 2024 and sell it today you would earn a total of 1.25 from holding 01 Communique Laboratory or generate 56.82% 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. 01 Communique Laboratory
Performance |
| Timeline |
| Direxion Daily Mid |
| 01 Communique Laboratory |
Direxion Daily and 01 Communique Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and 01 Communique
The main advantage of trading using opposite Direxion Daily and 01 Communique positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, 01 Communique 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 01 Communique will offset losses from the drop in 01 Communique'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 |
| 01 Communique vs. InterContinental Hotels Group | 01 Communique vs. Playa Hotels Resorts | 01 Communique vs. HYATT HOTELS A | 01 Communique vs. AEGEAN AIRLINES |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance |