Correlation Between Direxion Daily and Frequency Exchange
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Frequency Exchange 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 Frequency Exchange 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 Frequency Exchange Corp, you can compare the effects of market volatilities on Direxion Daily and Frequency Exchange 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 Frequency Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Frequency Exchange.
Diversification Opportunities for Direxion Daily and Frequency Exchange
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Frequency is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Frequency Exchange Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Exchange Corp 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 Frequency Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Exchange Corp has no effect on the direction of Direxion Daily i.e., Direxion Daily and Frequency Exchange go up and down completely randomly.
Pair Corralation between Direxion Daily and Frequency Exchange
Given the investment horizon of 90 days Direxion Daily is expected to generate 2.67 times less return on investment than Frequency Exchange. But when comparing it to its historical volatility, Direxion Daily Mid is 5.1 times less risky than Frequency Exchange. It trades about 0.32 of its potential returns per unit of risk. Frequency Exchange Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Frequency Exchange Corp on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Frequency Exchange Corp or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Direxion Daily Mid vs. Frequency Exchange Corp
Performance |
| Timeline |
| Direxion Daily Mid |
| Frequency Exchange Corp |
Direxion Daily and Frequency Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Frequency Exchange
The main advantage of trading using opposite Direxion Daily and Frequency Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Frequency Exchange 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 Frequency Exchange will offset losses from the drop in Frequency Exchange'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 |
| Frequency Exchange vs. Walmart Inc CDR | Frequency Exchange vs. Amazon CDR | Frequency Exchange vs. Berkshire Hathaway CDR | Frequency Exchange vs. UnitedHealth Group CDR |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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