Correlation Between AXS 2X and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both AXS 2X 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 AXS 2X and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXS 2X Innovation and Direxion Daily Semiconductor, you can compare the effects of market volatilities on AXS 2X 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 AXS 2X with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS 2X and Direxion Daily.
Diversification Opportunities for AXS 2X and Direxion Daily
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AXS and Direxion is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding AXS 2X Innovation and Direxion Daily Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Semic and AXS 2X 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 2X Innovation 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 Semic has no effect on the direction of AXS 2X i.e., AXS 2X and Direxion Daily go up and down completely randomly.
Pair Corralation between AXS 2X and Direxion Daily
Given the investment horizon of 90 days AXS 2X Innovation is expected to generate 1.03 times more return on investment than Direxion Daily. However, AXS 2X is 1.03 times more volatile than Direxion Daily Semiconductor. It trades about 0.27 of its potential returns per unit of risk. Direxion Daily Semiconductor is currently generating about 0.12 per unit of risk. If you would invest 6,649 in AXS 2X Innovation on August 28, 2024 and sell it today you would earn a total of 2,373 from holding AXS 2X Innovation or generate 35.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXS 2X Innovation vs. Direxion Daily Semiconductor
Performance |
| Timeline |
| AXS 2X Innovation |
| Direxion Daily Semic |
AXS 2X and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXS 2X and Direxion Daily
The main advantage of trading using opposite AXS 2X and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXS 2X 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.| AXS 2X vs. Direxion Daily SP | AXS 2X vs. Direxion Daily Semiconductor | AXS 2X vs. Direxion Daily Semiconductor |
| Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily SP | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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