Correlation Between Direxion Daily and Cambria Cannabis
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Cambria Cannabis 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 Cambria Cannabis 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 Cambria Cannabis ETF, you can compare the effects of market volatilities on Direxion Daily and Cambria Cannabis 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 Cambria Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Cambria Cannabis.
Diversification Opportunities for Direxion Daily and Cambria Cannabis
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Cambria is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Cambria Cannabis ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Cannabis ETF 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 Cambria Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Cannabis ETF has no effect on the direction of Direxion Daily i.e., Direxion Daily and Cambria Cannabis go up and down completely randomly.
Pair Corralation between Direxion Daily and Cambria Cannabis
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.49 times more return on investment than Cambria Cannabis. However, Direxion Daily is 1.49 times more volatile than Cambria Cannabis ETF. It trades about 0.09 of its potential returns per unit of risk. Cambria Cannabis ETF is currently generating about -0.01 per unit of risk. If you would invest 4,929 in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of 1,803 from holding Direxion Daily Mid or generate 36.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Cambria Cannabis ETF
Performance |
| Timeline |
| Direxion Daily Mid |
| Cambria Cannabis ETF |
Direxion Daily and Cambria Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Cambria Cannabis
The main advantage of trading using opposite Direxion Daily and Cambria Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Cambria Cannabis 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 Cambria Cannabis will offset losses from the drop in Cambria Cannabis' 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 |
| Cambria Cannabis vs. Managed Account Series | Cambria Cannabis vs. Fidelity Sai International | Cambria Cannabis vs. Schwab Strategic Trust | Cambria Cannabis vs. Inpex Corp ADR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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