Correlation Between Direxion Daily and Grupo Nacional
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Grupo Nacional 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 Grupo Nacional 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 Grupo Nacional Provincial, you can compare the effects of market volatilities on Direxion Daily and Grupo Nacional 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 Grupo Nacional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Grupo Nacional.
Diversification Opportunities for Direxion Daily and Grupo Nacional
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Grupo is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Grupo Nacional Provincial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Nacional Provincial 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 Grupo Nacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Nacional Provincial has no effect on the direction of Direxion Daily i.e., Direxion Daily and Grupo Nacional go up and down completely randomly.
Pair Corralation between Direxion Daily and Grupo Nacional
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.11 times more return on investment than Grupo Nacional. However, Direxion Daily is 1.11 times more volatile than Grupo Nacional Provincial. It trades about 0.18 of its potential returns per unit of risk. Grupo Nacional Provincial is currently generating about -0.13 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 Against |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Direxion Daily Mid vs. Grupo Nacional Provincial
Performance |
| Timeline |
| Direxion Daily Mid |
| Grupo Nacional Provincial |
Direxion Daily and Grupo Nacional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Grupo Nacional
The main advantage of trading using opposite Direxion Daily and Grupo Nacional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Grupo Nacional 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 Grupo Nacional will offset losses from the drop in Grupo Nacional'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 |
| Grupo Nacional vs. Samsung Electronics Co | Grupo Nacional vs. Taiwan Semiconductor Manufacturing | Grupo Nacional vs. JPMorgan Chase Co | Grupo Nacional vs. Bank of America |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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