Correlation Between Direxion Daily and MKS Instruments
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and MKS Instruments 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 MKS Instruments 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 MKS Instruments, you can compare the effects of market volatilities on Direxion Daily and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and MKS Instruments.
Diversification Opportunities for Direxion Daily and MKS Instruments
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and MKS is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of Direxion Daily i.e., Direxion Daily and MKS Instruments go up and down completely randomly.
Pair Corralation between Direxion Daily and MKS Instruments
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.06 times more return on investment than MKS Instruments. However, Direxion Daily is 1.06 times more volatile than MKS Instruments. It trades about 0.09 of its potential returns per unit of risk. MKS Instruments is currently generating about 0.07 per unit of risk. If you would invest 4,363 in Direxion Daily Mid on November 3, 2024 and sell it today you would earn a total of 1,445 from holding Direxion Daily Mid or generate 33.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. MKS Instruments
Performance |
| Timeline |
| Direxion Daily Mid |
| MKS Instruments |
Direxion Daily and MKS Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and MKS Instruments
The main advantage of trading using opposite Direxion Daily and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' 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 |
| MKS Instruments vs. Kingdee International Software | MKS Instruments vs. United Breweries Co | MKS Instruments vs. SALESFORCE INC CDR | MKS Instruments vs. China Resources Beer |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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