Correlation Between Direxion Daily and Mainstay Defined
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Mainstay Defined 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 Mainstay Defined 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 Mainstay Defined Term, you can compare the effects of market volatilities on Direxion Daily and Mainstay Defined 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 Mainstay Defined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Mainstay Defined.
Diversification Opportunities for Direxion Daily and Mainstay Defined
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Mainstay is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Mainstay Defined Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Defined Term 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 Mainstay Defined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Defined Term has no effect on the direction of Direxion Daily i.e., Direxion Daily and Mainstay Defined go up and down completely randomly.
Pair Corralation between Direxion Daily and Mainstay Defined
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Mainstay Defined. In addition to that, Direxion Daily is 13.44 times more volatile than Mainstay Defined Term. It trades about -0.01 of its total potential returns per unit of risk. Mainstay Defined Term is currently generating about 0.36 per unit of volatility. If you would invest 1,686 in Mainstay Defined Term on September 13, 2024 and sell it today you would earn a total of 23.00 from holding Mainstay Defined Term or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Mainstay Defined Term
Performance |
| Timeline |
| Direxion Daily Mid |
| Mainstay Defined Term |
Direxion Daily and Mainstay Defined Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Mainstay Defined
The main advantage of trading using opposite Direxion Daily and Mainstay Defined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Mainstay Defined 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 Mainstay Defined will offset losses from the drop in Mainstay Defined'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 |
| Mainstay Defined vs. World Energy Fund | Mainstay Defined vs. Alpsalerian Energy Infrastructure | Mainstay Defined vs. Oil Gas Ultrasector | Mainstay Defined vs. Fidelity Advisor Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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