Correlation Between T Rex and Industrial Select
Can any of the company-specific risk be diversified away by investing in both T Rex and Industrial Select 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 T Rex and Industrial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rex 2X Long and Industrial Select Sector, you can compare the effects of market volatilities on T Rex and Industrial Select 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 T Rex with a short position of Industrial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Industrial Select.
Diversification Opportunities for T Rex and Industrial Select
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NVDX and Industrial is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Industrial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Select Sector and T Rex 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 T Rex 2X Long are associated (or correlated) with Industrial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Select Sector has no effect on the direction of T Rex i.e., T Rex and Industrial Select go up and down completely randomly.
Pair Corralation between T Rex and Industrial Select
Given the investment horizon of 90 days T Rex 2X Long is expected to generate 4.97 times more return on investment than Industrial Select. However, T Rex is 4.97 times more volatile than Industrial Select Sector. It trades about 0.14 of its potential returns per unit of risk. Industrial Select Sector is currently generating about 0.16 per unit of risk. If you would invest 1,467 in T Rex 2X Long on August 26, 2024 and sell it today you would earn a total of 379.00 from holding T Rex 2X Long or generate 25.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rex 2X Long vs. Industrial Select Sector
Performance |
| Timeline |
| T Rex 2X |
| Industrial Select Sector |
T Rex and Industrial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rex and Industrial Select
The main advantage of trading using opposite T Rex and Industrial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, Industrial Select 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 Industrial Select will offset losses from the drop in Industrial Select's long position.| T Rex vs. Direxion Daily SP | T Rex vs. Direxion Daily Semiconductor | T Rex vs. Direxion Daily Semiconductor |
| Industrial Select vs. Gabelli ETFs Trust | Industrial Select vs. First Trust Exchange Traded | Industrial Select vs. Northern Lights | Industrial Select vs. First Trust Exchange Traded |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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