Correlation Between Direxion Daily and Franklin LibertyQ
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Franklin LibertyQ 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 Franklin LibertyQ 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 Franklin LibertyQ AC, you can compare the effects of market volatilities on Direxion Daily and Franklin LibertyQ 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 Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Franklin LibertyQ.
Diversification Opportunities for Direxion Daily and Franklin LibertyQ
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Franklin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Franklin LibertyQ AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ 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 Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ has no effect on the direction of Direxion Daily i.e., Direxion Daily and Franklin LibertyQ go up and down completely randomly.
Pair Corralation between Direxion Daily and Franklin LibertyQ
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.93 times more return on investment than Franklin LibertyQ. However, Direxion Daily is 3.93 times more volatile than Franklin LibertyQ AC. It trades about 0.18 of its potential returns per unit of risk. Franklin LibertyQ AC is currently generating about 0.01 per unit of risk. If you would invest 4,993 in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of 1,739 from holding Direxion Daily Mid or generate 34.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Direxion Daily Mid vs. Franklin LibertyQ AC
Performance |
| Timeline |
| Direxion Daily Mid |
| Franklin LibertyQ |
Direxion Daily and Franklin LibertyQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Franklin LibertyQ
The main advantage of trading using opposite Direxion Daily and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Franklin LibertyQ 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 Franklin LibertyQ will offset losses from the drop in Franklin LibertyQ'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 |
| Franklin LibertyQ vs. Franklin LibertyQ Global | Franklin LibertyQ vs. Franklin Libertyshares ICAV | Franklin LibertyQ vs. Franklin FTSE Asia | Franklin LibertyQ vs. Franklin FTSE Brazil |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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