Correlation Between Direxion Daily and Waste Connections
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Waste Connections 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 Waste Connections 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 Waste Connections, you can compare the effects of market volatilities on Direxion Daily and Waste Connections 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 Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Waste Connections.
Diversification Opportunities for Direxion Daily and Waste Connections
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Waste is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of Direxion Daily i.e., Direxion Daily and Waste Connections go up and down completely randomly.
Pair Corralation between Direxion Daily and Waste Connections
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 3.37 times more return on investment than Waste Connections. However, Direxion Daily is 3.37 times more volatile than Waste Connections. It trades about 0.28 of its potential returns per unit of risk. Waste Connections is currently generating about 0.46 per unit of risk. If you would invest 5,385 in Direxion Daily Mid on September 5, 2024 and sell it today you would earn a total of 1,235 from holding Direxion Daily Mid or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Daily Mid vs. Waste Connections
Performance |
| Timeline |
| Direxion Daily Mid |
| Waste Connections |
Direxion Daily and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Waste Connections
The main advantage of trading using opposite Direxion Daily and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' 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 |
| Waste Connections vs. Westlake Chemical | Waste Connections vs. SEKISUI CHEMICAL | Waste Connections vs. Hyster Yale Materials Handling | Waste Connections vs. Goodyear Tire Rubber |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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