Correlation Between Direxion Shares and AXS TSLA
Can any of the company-specific risk be diversified away by investing in both Direxion Shares and AXS TSLA 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 Shares and AXS TSLA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Shares ETF and AXS TSLA Bear, you can compare the effects of market volatilities on Direxion Shares and AXS TSLA 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 Shares with a short position of AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and AXS TSLA.
Diversification Opportunities for Direxion Shares and AXS TSLA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and AXS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear and Direxion Shares 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 Shares ETF are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of Direxion Shares i.e., Direxion Shares and AXS TSLA go up and down completely randomly.
Pair Corralation between Direxion Shares and AXS TSLA
Given the investment horizon of 90 days Direxion Shares ETF is expected to under-perform the AXS TSLA. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Shares ETF is 22.99 times less risky than AXS TSLA. The etf trades about -0.24 of its potential returns per unit of risk. The AXS TSLA Bear is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,505 in AXS TSLA Bear on August 30, 2024 and sell it today you would earn a total of 3,133 from holding AXS TSLA Bear or generate 208.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Direxion Shares ETF vs. AXS TSLA Bear
Performance |
| Timeline |
| Direxion Shares ETF |
| AXS TSLA Bear |
Direxion Shares and AXS TSLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Shares and AXS TSLA
The main advantage of trading using opposite Direxion Shares and AXS TSLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Shares position performs unexpectedly, AXS TSLA 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 AXS TSLA will offset losses from the drop in AXS TSLA's long position.| Direxion Shares vs. AXS TSLA Bear | Direxion Shares vs. ProShares Trust | Direxion Shares vs. ProShares UltraShort Bloomberg |
| AXS TSLA vs. AXS 125X NVDA | AXS TSLA vs. Direxion Shares ETF | AXS TSLA vs. Direxion Shares ETF | AXS TSLA vs. Tuttle Capital Short |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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