Correlation Between Astar and Direxion Shares

Can any of the company-specific risk be diversified away by investing in both Astar and Direxion Shares 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 Astar and Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astar and Direxion Shares ETF, you can compare the effects of market volatilities on Astar and Direxion Shares 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 Astar with a short position of Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Direxion Shares.

Diversification Opportunities for Astar and Direxion Shares

0.5

Correlation Coefficient

Astar  Direxion Shares

Very weak diversification

The 3 months correlation between Astar and Direxion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF and Astar 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 Astar are associated (or correlated) with Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Astar i.e., Astar and Direxion Shares go up and down completely randomly.

Pair Corralation between Astar and Direxion Shares

Assuming the 90 days trading horizon Astar is expected to generate 2.38 times less return on investment than Direxion Shares. In addition to that, Astar is 1.63 times more volatile than Direxion Shares ETF. It trades about 0.04 of its total potential returns per unit of risk. Direxion Shares ETF is currently generating about 0.15 per unit of volatility. If you would invest  13,952  in Direxion Shares ETF on October 10, 2024 and sell it today you would earn a total of  4,288  from holding Direxion Shares ETF or generate 30.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Direxion Shares ETF

Astar

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Astar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Direxion Shares ETF

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Shares ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Direxion Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astar and Direxion Shares

The main advantage of trading using opposite Astar and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Direxion Shares 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 Shares will offset losses from the drop in Direxion Shares' long position.

The idea behind Astar and Direxion Shares ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.