Correlation Between Direxion Daily and Ebix
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Ebix 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 Ebix 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 Ebix Inc, you can compare the effects of market volatilities on Direxion Daily and Ebix 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 Ebix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Ebix.
Diversification Opportunities for Direxion Daily and Ebix
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Ebix is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Ebix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebix Inc 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 Ebix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebix Inc has no effect on the direction of Direxion Daily i.e., Direxion Daily and Ebix go up and down completely randomly.
Pair Corralation between Direxion Daily and Ebix
Given the investment horizon of 90 days Direxion Daily is expected to generate 1.89 times less return on investment than Ebix. But when comparing it to its historical volatility, Direxion Daily Mid is 1.45 times less risky than Ebix. It trades about 0.05 of its potential returns per unit of risk. Ebix Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Ebix Inc on September 12, 2024 and sell it today you would earn a total of 767.00 from holding Ebix Inc or generate 39.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.49% |
| Values | Daily Returns |
Direxion Daily Mid vs. Ebix Inc
Performance |
| Timeline |
| Direxion Daily Mid |
| Ebix Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Direxion Daily and Ebix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Ebix
The main advantage of trading using opposite Direxion Daily and Ebix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Ebix 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 Ebix will offset losses from the drop in Ebix'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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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