Correlation Between Direxion Daily and Pacific Ridge
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Pacific Ridge 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 Pacific Ridge 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 Pacific Ridge Exploration, you can compare the effects of market volatilities on Direxion Daily and Pacific Ridge 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 Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Pacific Ridge.
Diversification Opportunities for Direxion Daily and Pacific Ridge
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Pacific is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge Exploration 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 Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of Direxion Daily i.e., Direxion Daily and Pacific Ridge go up and down completely randomly.
Pair Corralation between Direxion Daily and Pacific Ridge
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.29 times more return on investment than Pacific Ridge. However, Direxion Daily Mid is 3.39 times less risky than Pacific Ridge. It trades about 0.07 of its potential returns per unit of risk. Pacific Ridge Exploration is currently generating about -0.03 per unit of risk. If you would invest 4,264 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 2,004 from holding Direxion Daily Mid or generate 47.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Direxion Daily Mid vs. Pacific Ridge Exploration
Performance |
| Timeline |
| Direxion Daily Mid |
| Pacific Ridge Exploration |
Direxion Daily and Pacific Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Pacific Ridge
The main advantage of trading using opposite Direxion Daily and Pacific Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Pacific Ridge 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 Pacific Ridge will offset losses from the drop in Pacific Ridge'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 |
| Pacific Ridge vs. Commander Resources | Pacific Ridge vs. Galantas Gold Corp | Pacific Ridge vs. Grande Portage Resources | Pacific Ridge vs. Wescan Goldfields |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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