Correlation Between Direxion Daily and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Karoon Energy 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 Karoon Energy 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 Karoon Energy, you can compare the effects of market volatilities on Direxion Daily and Karoon Energy 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 Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Karoon Energy.
Diversification Opportunities for Direxion Daily and Karoon Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Karoon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy 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 Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of Direxion Daily i.e., Direxion Daily and Karoon Energy go up and down completely randomly.
Pair Corralation between Direxion Daily and Karoon Energy
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.14 times more return on investment than Karoon Energy. However, Direxion Daily is 1.14 times more volatile than Karoon Energy. It trades about 0.06 of its potential returns per unit of risk. Karoon Energy is currently generating about -0.03 per unit of risk. If you would invest 3,730 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 2,538 from holding Direxion Daily Mid or generate 68.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.9% |
| Values | Daily Returns |
Direxion Daily Mid vs. Karoon Energy
Performance |
| Timeline |
| Direxion Daily Mid |
| Karoon Energy |
Direxion Daily and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Karoon Energy
The main advantage of trading using opposite Direxion Daily and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Karoon Energy 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 Karoon Energy will offset losses from the drop in Karoon Energy'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 |
| Karoon Energy vs. TAL Education Group | Karoon Energy vs. EEDUCATION ALBERT AB | Karoon Energy vs. Wayside Technology Group | Karoon Energy vs. SMA Solar Technology |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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