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
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AXS and Direxion is -0.56. 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 is expected to generate 8.9 times less return on investment than Direxion Shares. But when comparing it to its historical volatility, AXS 125X NVDA is 2.63 times less risky than Direxion Shares. It trades about 0.07 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,281 in Direxion Shares ETF on August 30, 2024 and sell it today you would earn a total of 711.00 from holding Direxion Shares ETF or generate 55.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very 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. AXS TSLA Bear | Direxion Shares vs. Direxion Daily AMZN |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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