Correlation Between Direxion Daily and Recharge Resources
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Recharge Resources 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 Recharge Resources 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 Recharge Resources, you can compare the effects of market volatilities on Direxion Daily and Recharge Resources 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 Recharge Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Recharge Resources.
Diversification Opportunities for Direxion Daily and Recharge Resources
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Recharge is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Recharge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recharge Resources 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 Recharge Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recharge Resources has no effect on the direction of Direxion Daily i.e., Direxion Daily and Recharge Resources go up and down completely randomly.
Pair Corralation between Direxion Daily and Recharge Resources
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.25 times more return on investment than Recharge Resources. However, Direxion Daily Mid is 4.08 times less risky than Recharge Resources. It trades about -0.07 of its potential returns per unit of risk. Recharge Resources is currently generating about -0.08 per unit of risk. If you would invest 6,539 in Direxion Daily Mid on September 12, 2024 and sell it today you would lose (271.00) from holding Direxion Daily Mid or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Recharge Resources
Performance |
| Timeline |
| Direxion Daily Mid |
| Recharge Resources |
Direxion Daily and Recharge Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Recharge Resources
The main advantage of trading using opposite Direxion Daily and Recharge Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Recharge Resources 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 Recharge Resources will offset losses from the drop in Recharge Resources' 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 |
| Recharge Resources vs. Lithium Ionic Corp | Recharge Resources vs. Sun Summit Minerals | Recharge Resources vs. Pampa Metals | Recharge Resources vs. Progressive Planet Solutions |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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