Correlation Between Direxion Daily and Fjordland Exploration
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Fjordland Exploration 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 Fjordland Exploration 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 Fjordland Exploration, you can compare the effects of market volatilities on Direxion Daily and Fjordland Exploration 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 Fjordland Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Fjordland Exploration.
Diversification Opportunities for Direxion Daily and Fjordland Exploration
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Fjordland is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Fjordland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fjordland Exploration 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 Fjordland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fjordland Exploration has no effect on the direction of Direxion Daily i.e., Direxion Daily and Fjordland Exploration go up and down completely randomly.
Pair Corralation between Direxion Daily and Fjordland Exploration
Given the investment horizon of 90 days Direxion Daily is expected to generate 1.95 times less return on investment than Fjordland Exploration. But when comparing it to its historical volatility, Direxion Daily Mid is 4.71 times less risky than Fjordland Exploration. It trades about 0.09 of its potential returns per unit of risk. Fjordland Exploration is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Fjordland Exploration on September 4, 2024 and sell it today you would lose (2.00) from holding Fjordland Exploration or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Direxion Daily Mid vs. Fjordland Exploration
Performance |
| Timeline |
| Direxion Daily Mid |
| Fjordland Exploration |
Direxion Daily and Fjordland Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Fjordland Exploration
The main advantage of trading using opposite Direxion Daily and Fjordland Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Fjordland Exploration 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 Fjordland Exploration will offset losses from the drop in Fjordland Exploration'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 |
| Fjordland Exploration vs. First Majestic Silver | Fjordland Exploration vs. Ivanhoe Energy | Fjordland Exploration vs. Orezone Gold Corp | Fjordland Exploration vs. Faraday Copper Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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