Correlation Between Direxion Daily and Compagnie
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Compagnie 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 Compagnie 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 Compagnie Du Mont Blanc, you can compare the effects of market volatilities on Direxion Daily and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Compagnie.
Diversification Opportunities for Direxion Daily and Compagnie
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Compagnie is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Compagnie Du Mont Blanc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Du Mont 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Du Mont has no effect on the direction of Direxion Daily i.e., Direxion Daily and Compagnie go up and down completely randomly.
Pair Corralation between Direxion Daily and Compagnie
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.91 times more return on investment than Compagnie. However, Direxion Daily is 1.91 times more volatile than Compagnie Du Mont Blanc. It trades about 0.06 of its potential returns per unit of risk. Compagnie Du Mont Blanc is currently generating about 0.04 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 Together |
| Strength | Significant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Direxion Daily Mid vs. Compagnie Du Mont Blanc
Performance |
| Timeline |
| Direxion Daily Mid |
| Compagnie Du Mont |
Direxion Daily and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Compagnie
The main advantage of trading using opposite Direxion Daily and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie'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 |
| Compagnie vs. Trigano SA | Compagnie vs. Bnteau SA | Compagnie vs. SA Catana Group | Compagnie vs. Fountaine Pajo |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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