Correlation Between Procter Gamble and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Procter Gamble 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 Procter Gamble and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Direxion Daily Small, you can compare the effects of market volatilities on Procter Gamble 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 Procter Gamble with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Direxion Daily.
Diversification Opportunities for Procter Gamble and Direxion Daily
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procter and Direxion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Direxion Daily Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Small and Procter Gamble 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 Procter Gamble 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 Small has no effect on the direction of Procter Gamble i.e., Procter Gamble and Direxion Daily go up and down completely randomly.
Pair Corralation between Procter Gamble and Direxion Daily
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 9.45 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Procter Gamble is 4.25 times less risky than Direxion Daily. It trades about 0.07 of its potential returns per unit of risk. Direxion Daily Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,396 in Direxion Daily Small on August 28, 2024 and sell it today you would earn a total of 1,229 from holding Direxion Daily Small or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Direxion Daily Small
Performance |
| Timeline |
| Procter Gamble |
| Direxion Daily Small |
Procter Gamble and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Direxion Daily
The main advantage of trading using opposite Procter Gamble and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble 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.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Direxion Daily vs. Direxion Daily Small | Direxion Daily vs. Direxion Daily Financial | Direxion Daily vs. Direxion Daily Energy | Direxion Daily vs. Direxion Daily SP500 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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