Correlation Between Direxion Daily and Lazard International
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Lazard International 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 Lazard International 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 Lazard International Small, you can compare the effects of market volatilities on Direxion Daily and Lazard International 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 Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Lazard International.
Diversification Opportunities for Direxion Daily and Lazard International
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Lazard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Lazard International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International 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 Lazard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard International has no effect on the direction of Direxion Daily i.e., Direxion Daily and Lazard International go up and down completely randomly.
Pair Corralation between Direxion Daily and Lazard International
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.67 times more return on investment than Lazard International. However, Direxion Daily is 3.67 times more volatile than Lazard International Small. It trades about 0.05 of its potential returns per unit of risk. Lazard International Small is currently generating about 0.02 per unit of risk. If you would invest 3,781 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,951 from holding Direxion Daily Mid or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Lazard International Small
Performance |
| Timeline |
| Direxion Daily Mid |
| Lazard International |
Direxion Daily and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Lazard International
The main advantage of trading using opposite Direxion Daily and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Lazard International 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 Lazard International will offset losses from the drop in Lazard International'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 |
| Lazard International vs. Bbh Intermediate Municipal | Lazard International vs. Limited Term Tax | Lazard International vs. Federated Pennsylvania Municipal | Lazard International vs. Franklin High Yield |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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