Correlation Between Direxion Daily and CI ONE
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and CI ONE 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 CI ONE 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 CI ONE North, you can compare the effects of market volatilities on Direxion Daily and CI ONE 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 CI ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and CI ONE.
Diversification Opportunities for Direxion Daily and CI ONE
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and ONEB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and CI ONE North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI ONE North 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 CI ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI ONE North has no effect on the direction of Direxion Daily i.e., Direxion Daily and CI ONE go up and down completely randomly.
Pair Corralation between Direxion Daily and CI ONE
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the CI ONE. In addition to that, Direxion Daily is 9.53 times more volatile than CI ONE North. It trades about -0.01 of its total potential returns per unit of risk. CI ONE North is currently generating about 0.16 per unit of volatility. If you would invest 4,933 in CI ONE North on September 13, 2024 and sell it today you would earn a total of 42.00 from holding CI ONE North or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Direxion Daily Mid vs. CI ONE North
Performance |
| Timeline |
| Direxion Daily Mid |
| CI ONE North |
Direxion Daily and CI ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and CI ONE
The main advantage of trading using opposite Direxion Daily and CI ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, CI ONE 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 CI ONE will offset losses from the drop in CI ONE'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 |
| CI ONE vs. CI ONE Global | CI ONE vs. CI Yield Enhanced | CI ONE vs. CI MidCap Dividend | CI ONE vs. CI Canadian Short Term |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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