Correlation Between Exxon and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Direxion Daily Travel, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Direxion Daily.
Diversification Opportunities for Exxon and Direxion Daily
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Exxon and Direxion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Direxion Daily Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Travel and Exxon 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 Exxon Mobil Corp 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 Travel has no effect on the direction of Exxon i.e., Exxon and Direxion Daily go up and down completely randomly.
Pair Corralation between Exxon and Direxion Daily
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.44 times more return on investment than Direxion Daily. However, Exxon Mobil Corp is 2.28 times less risky than Direxion Daily. It trades about -0.02 of its potential returns per unit of risk. Direxion Daily Travel is currently generating about -0.01 per unit of risk. If you would invest 11,235 in Exxon Mobil Corp on January 11, 2025 and sell it today you would lose (921.00) from holding Exxon Mobil Corp or give up 8.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Direxion Daily Travel
Performance |
| Timeline |
| Exxon Mobil Corp |
| Direxion Daily Travel |
Exxon and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Direxion Daily
The main advantage of trading using opposite Exxon and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Direxion Daily vs. Direxion Daily Cloud | Direxion Daily vs. Direxion Daily Cnsmr | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily Industrials |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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