Correlation Between Direxion Daily and TREECOM
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and TREECOM 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 TREECOM 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 TREECOM, you can compare the effects of market volatilities on Direxion Daily and TREECOM 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 TREECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and TREECOM.
Diversification Opportunities for Direxion Daily and TREECOM
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and TREECOM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and TREECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TREECOM 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 TREECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TREECOM has no effect on the direction of Direxion Daily i.e., Direxion Daily and TREECOM go up and down completely randomly.
Pair Corralation between Direxion Daily and TREECOM
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.62 times more return on investment than TREECOM. However, Direxion Daily Mid is 1.62 times less risky than TREECOM. It trades about -0.07 of its potential returns per unit of risk. TREECOM is currently generating about -0.21 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 | 95.65% |
| Values | Daily Returns |
Direxion Daily Mid vs. TREECOM
Performance |
| Timeline |
| Direxion Daily Mid |
| TREECOM |
Direxion Daily and TREECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and TREECOM
The main advantage of trading using opposite Direxion Daily and TREECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, TREECOM 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 TREECOM will offset losses from the drop in TREECOM'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 |
| TREECOM vs. DATAGROUP SE | TREECOM vs. GALENA MINING LTD | TREECOM vs. MINCO SILVER | TREECOM vs. Zijin Mining Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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