Correlation Between Direxion Daily and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Yanzhou Coal 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 Yanzhou Coal 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 Yanzhou Coal Mining, you can compare the effects of market volatilities on Direxion Daily and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Yanzhou Coal.
Diversification Opportunities for Direxion Daily and Yanzhou Coal
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Yanzhou is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Direxion Daily i.e., Direxion Daily and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Direxion Daily and Yanzhou Coal
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 2.13 times more return on investment than Yanzhou Coal. However, Direxion Daily is 2.13 times more volatile than Yanzhou Coal Mining. It trades about 0.28 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.22 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 | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Daily Mid vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Direxion Daily Mid |
| Yanzhou Coal Mining |
Direxion Daily and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Yanzhou Coal
The main advantage of trading using opposite Direxion Daily and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal'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 |
| Yanzhou Coal vs. PT Bayan Resources | Yanzhou Coal vs. Yanzhou Coal Mining | Yanzhou Coal vs. PT Adaro Energy | Yanzhou Coal vs. PT Bumi Resources |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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