Correlation Between Direxion Daily and CIMB SP
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and CIMB SP 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 CIMB SP 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 CIMB SP Ethical, you can compare the effects of market volatilities on Direxion Daily and CIMB SP 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 CIMB SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and CIMB SP.
Diversification Opportunities for Direxion Daily and CIMB SP
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and CIMB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and CIMB SP Ethical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB SP Ethical 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 CIMB SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB SP Ethical has no effect on the direction of Direxion Daily i.e., Direxion Daily and CIMB SP go up and down completely randomly.
Pair Corralation between Direxion Daily and CIMB SP
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.18 times more return on investment than CIMB SP. However, Direxion Daily is 3.18 times more volatile than CIMB SP Ethical. It trades about 0.09 of its potential returns per unit of risk. CIMB SP Ethical is currently generating about 0.13 per unit of risk. If you would invest 3,822 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,910 from holding Direxion Daily Mid or generate 76.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.01% |
| Values | Daily Returns |
Direxion Daily Mid vs. CIMB SP Ethical
Performance |
| Timeline |
| Direxion Daily Mid |
| CIMB SP Ethical |
Direxion Daily and CIMB SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and CIMB SP
The main advantage of trading using opposite Direxion Daily and CIMB SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, CIMB SP 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 CIMB SP will offset losses from the drop in CIMB SP'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 |
| CIMB SP vs. iShares Govt Bond | CIMB SP vs. Amundi MSCI Europe | CIMB SP vs. iShares Global AAA AA | CIMB SP vs. iShares Smart City |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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