Correlation Between Pfizer and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Pfizer and Direxion Daily 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 Pfizer and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Direxion Daily SP, you can compare the effects of market volatilities on Pfizer and Direxion Daily 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 Pfizer with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Direxion Daily.
Diversification Opportunities for Pfizer and Direxion Daily
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and Direxion is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and Pfizer 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 Pfizer Inc are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP has no effect on the direction of Pfizer i.e., Pfizer and Direxion Daily go up and down completely randomly.
Pair Corralation between Pfizer and Direxion Daily
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Direxion Daily. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.11 times less risky than Direxion Daily. The stock trades about -0.08 of its potential returns per unit of risk. The Direxion Daily SP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,451 in Direxion Daily SP on August 29, 2024 and sell it today you would earn a total of 8,139 from holding Direxion Daily SP or generate 109.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Direxion Daily SP
Performance |
| Timeline |
| Pfizer Inc |
| Direxion Daily SP |
Pfizer and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Direxion Daily
The main advantage of trading using opposite Pfizer and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Direxion Daily 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 Daily will offset losses from the drop in Direxion Daily's long position.| Pfizer vs. Capricor Therapeutics | Pfizer vs. Soleno Therapeutics | Pfizer vs. Bio Path Holdings | Pfizer vs. Moleculin Biotech |
| Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily Semiconductor |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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