Correlation Between Direxion Daily and Nextferm Technologies
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Nextferm Technologies 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 Nextferm Technologies 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 Nextferm Technologies, you can compare the effects of market volatilities on Direxion Daily and Nextferm Technologies 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 Nextferm Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Nextferm Technologies.
Diversification Opportunities for Direxion Daily and Nextferm Technologies
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Nextferm is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Nextferm Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextferm Technologies 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 Nextferm Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextferm Technologies has no effect on the direction of Direxion Daily i.e., Direxion Daily and Nextferm Technologies go up and down completely randomly.
Pair Corralation between Direxion Daily and Nextferm Technologies
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.5 times more return on investment than Nextferm Technologies. However, Direxion Daily Mid is 2.0 times less risky than Nextferm Technologies. It trades about 0.1 of its potential returns per unit of risk. Nextferm Technologies is currently generating about -0.19 per unit of risk. If you would invest 4,761 in Direxion Daily Mid on September 5, 2024 and sell it today you would earn a total of 1,859 from holding Direxion Daily Mid or generate 39.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 75.2% |
| Values | Daily Returns |
Direxion Daily Mid vs. Nextferm Technologies
Performance |
| Timeline |
| Direxion Daily Mid |
| Nextferm Technologies |
Direxion Daily and Nextferm Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Nextferm Technologies
The main advantage of trading using opposite Direxion Daily and Nextferm Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Nextferm Technologies 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 Nextferm Technologies will offset losses from the drop in Nextferm Technologies' 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 |
| Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Neto Malinda | Nextferm Technologies vs. Kerur Holdings | Nextferm Technologies vs. Willy Food |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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