Correlation Between Direxion Daily and PGIM Active
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and PGIM Active 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 Daily and PGIM Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Cnsmr and PGIM Active High, you can compare the effects of market volatilities on Direxion Daily and PGIM Active 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 Daily with a short position of PGIM Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and PGIM Active.
Diversification Opportunities for Direxion Daily and PGIM Active
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and PGIM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Cnsmr and PGIM Active High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGIM Active High and Direxion Daily 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 Daily Cnsmr are associated (or correlated) with PGIM Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGIM Active High has no effect on the direction of Direxion Daily i.e., Direxion Daily and PGIM Active go up and down completely randomly.
Pair Corralation between Direxion Daily and PGIM Active
Given the investment horizon of 90 days Direxion Daily is expected to generate 1.34 times less return on investment than PGIM Active. In addition to that, Direxion Daily is 15.68 times more volatile than PGIM Active High. It trades about 0.02 of its total potential returns per unit of risk. PGIM Active High is currently generating about 0.34 per unit of volatility. If you would invest 3,451 in PGIM Active High on October 20, 2024 and sell it today you would earn a total of 60.00 from holding PGIM Active High or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Cnsmr vs. PGIM Active High
Performance |
| Timeline |
| Direxion Daily Cnsmr |
| PGIM Active High |
Direxion Daily and PGIM Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and PGIM Active
The main advantage of trading using opposite Direxion Daily and PGIM Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, PGIM Active 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 PGIM Active will offset losses from the drop in PGIM Active's long position.| Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Dow | Direxion Daily vs. Direxion Daily Utilities |
| PGIM Active vs. Xtrackers High Beta | PGIM Active vs. Xtrackers Short Duration | PGIM Active vs. FlexShares High Yield | PGIM Active vs. Franklin Liberty High |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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