Correlation Between Direxion Daily and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Franklin Liberty 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 Franklin Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily NVDA and Franklin Liberty Investment, you can compare the effects of market volatilities on Direxion Daily and Franklin Liberty 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 Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Franklin Liberty.
Diversification Opportunities for Direxion Daily and Franklin Liberty
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Franklin is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily NVDA and Franklin Liberty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Inv 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 NVDA are associated (or correlated) with Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Inv has no effect on the direction of Direxion Daily i.e., Direxion Daily and Franklin Liberty go up and down completely randomly.
Pair Corralation between Direxion Daily and Franklin Liberty
Given the investment horizon of 90 days Direxion Daily NVDA is expected to generate 13.36 times more return on investment than Franklin Liberty. However, Direxion Daily is 13.36 times more volatile than Franklin Liberty Investment. It trades about 0.1 of its potential returns per unit of risk. Franklin Liberty Investment is currently generating about 0.05 per unit of risk. If you would invest 2,498 in Direxion Daily NVDA on September 14, 2024 and sell it today you would earn a total of 6,987 from holding Direxion Daily NVDA or generate 279.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 64.04% |
| Values | Daily Returns |
Direxion Daily NVDA vs. Franklin Liberty Investment
Performance |
| Timeline |
| Direxion Daily NVDA |
| Franklin Liberty Inv |
Direxion Daily and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Franklin Liberty
The main advantage of trading using opposite Direxion Daily and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Franklin Liberty 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 Franklin Liberty will offset losses from the drop in Franklin Liberty's long position.| Direxion Daily vs. Freedom Day Dividend | Direxion Daily vs. Franklin Templeton ETF | Direxion Daily vs. iShares MSCI China | Direxion Daily vs. Tidal Trust II |
| Franklin Liberty vs. Franklin Liberty Short | Franklin Liberty vs. Goldman Sachs Access | Franklin Liberty vs. Franklin Templeton ETF | Franklin Liberty vs. Franklin Liberty Federal |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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