Correlation Between Direxion Daily and Interoil Exploration
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Interoil 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 Interoil 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 Interoil Exploration and, you can compare the effects of market volatilities on Direxion Daily and Interoil 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 Interoil Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Interoil Exploration.
Diversification Opportunities for Direxion Daily and Interoil Exploration
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Interoil is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Interoil Exploration and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interoil Exploration and 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 Interoil Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interoil Exploration and has no effect on the direction of Direxion Daily i.e., Direxion Daily and Interoil Exploration go up and down completely randomly.
Pair Corralation between Direxion Daily and Interoil Exploration
Given the investment horizon of 90 days Direxion Daily is expected to generate 1.52 times less return on investment than Interoil Exploration. But when comparing it to its historical volatility, Direxion Daily Mid is 2.43 times less risky than Interoil Exploration. It trades about 0.18 of its potential returns per unit of risk. Interoil Exploration and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 210.00 in Interoil Exploration and on September 3, 2024 and sell it today you would earn a total of 89.00 from holding Interoil Exploration and or generate 42.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Direxion Daily Mid vs. Interoil Exploration and
Performance |
| Timeline |
| Direxion Daily Mid |
| Interoil Exploration and |
Direxion Daily and Interoil Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Interoil Exploration
The main advantage of trading using opposite Direxion Daily and Interoil Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Interoil 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 Interoil Exploration will offset losses from the drop in Interoil 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 |
| Interoil Exploration vs. Questerre Energy | Interoil Exploration vs. Dno ASA | Interoil Exploration vs. Panoro Energy ASA | Interoil Exploration vs. Solstad Offsho |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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