Correlation Between AXS 125X and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both AXS 125X and Direxion Shares 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 AXS 125X and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXS 125X NVDA and Direxion Shares ETF, you can compare the effects of market volatilities on AXS 125X and Direxion Shares 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 AXS 125X with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 125X and Direxion Shares.
Diversification Opportunities for AXS 125X and Direxion Shares
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AXS and Direxion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AXS 125X NVDA and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and AXS 125X 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 AXS 125X NVDA are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of AXS 125X i.e., AXS 125X and Direxion Shares go up and down completely randomly.
Pair Corralation between AXS 125X and Direxion Shares
Given the investment horizon of 90 days AXS 125X NVDA is expected to under-perform the Direxion Shares. In addition to that, AXS 125X is 3.9 times more volatile than Direxion Shares ETF. It trades about -0.14 of its total potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.05 per unit of volatility. If you would invest 2,508 in Direxion Shares ETF on August 26, 2024 and sell it today you would lose (833.00) from holding Direxion Shares ETF or give up 33.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXS 125X NVDA vs. Direxion Shares ETF
Performance |
| Timeline |
| AXS 125X NVDA |
| Direxion Shares ETF |
AXS 125X and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXS 125X and Direxion Shares
The main advantage of trading using opposite AXS 125X and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 125X position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' long position.| AXS 125X vs. AXS TSLA Bear | AXS 125X vs. Direxion Shares ETF | AXS 125X vs. Direxion Shares ETF | AXS 125X vs. Direxion Shares ETF |
| Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Shares ETF | Direxion Shares vs. Direxion Daily AMZN | Direxion Shares vs. Direxion Daily MSFT |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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