Correlation Between Direxion Daily and Popular Total
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Popular Total 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 Popular Total 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 Popular Total Return, you can compare the effects of market volatilities on Direxion Daily and Popular Total 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 Popular Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Popular Total.
Diversification Opportunities for Direxion Daily and Popular Total
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Popular is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Popular Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Popular Total Return 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 Popular Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Popular Total Return has no effect on the direction of Direxion Daily i.e., Direxion Daily and Popular Total go up and down completely randomly.
Pair Corralation between Direxion Daily and Popular Total
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 5.76 times more return on investment than Popular Total. However, Direxion Daily is 5.76 times more volatile than Popular Total Return. It trades about 0.05 of its potential returns per unit of risk. Popular Total Return is currently generating about 0.08 per unit of risk. If you would invest 3,781 in Direxion Daily Mid on September 4, 2024 and sell it today you would earn a total of 2,951 from holding Direxion Daily Mid or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Direxion Daily Mid vs. Popular Total Return
Performance |
| Timeline |
| Direxion Daily Mid |
| Popular Total Return |
Direxion Daily and Popular Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Popular Total
The main advantage of trading using opposite Direxion Daily and Popular Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Popular Total 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 Popular Total will offset losses from the drop in Popular Total'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 |
| Popular Total vs. Popular Total Return | Popular Total vs. FT Vest Equity | Popular Total vs. Zillow Group Class | Popular Total vs. Northern Lights |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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