Correlation Between Direxion Daily and World Copper
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and World Copper 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 World Copper 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 World Copper, you can compare the effects of market volatilities on Direxion Daily and World Copper 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 World Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and World Copper.
Diversification Opportunities for Direxion Daily and World Copper
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and World is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and World Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Copper 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 World Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Copper has no effect on the direction of Direxion Daily i.e., Direxion Daily and World Copper go up and down completely randomly.
Pair Corralation between Direxion Daily and World Copper
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 0.44 times more return on investment than World Copper. However, Direxion Daily Mid is 2.3 times less risky than World Copper. It trades about 0.09 of its potential returns per unit of risk. World Copper is currently generating about -0.1 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. World Copper
Performance |
| Timeline |
| Direxion Daily Mid |
| World Copper |
Direxion Daily and World Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and World Copper
The main advantage of trading using opposite Direxion Daily and World Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, World Copper 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 World Copper will offset losses from the drop in World Copper'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 |
| World Copper vs. Hot Chili Limited | World Copper vs. Three Valley Copper | World Copper vs. Los Andes Copper | World Copper vs. QC Copper and |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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