Correlation Between Astar and Direxion Daily

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

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

Diversification Opportunities for Astar and Direxion Daily

-0.19

Correlation Coefficient

Astar  Direxion Daily

Good diversification

The 3 months correlation between Astar and Direxion is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Direxion Daily MU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily MU 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 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 MU has no effect on the direction of Astar i.e., Astar and Direxion Daily go up and down completely randomly.

Pair Corralation between Astar and Direxion Daily

Assuming the 90 days trading horizon Astar is expected to under-perform the Direxion Daily. But the crypto coin apears to be less risky and, when comparing its historical volatility, Astar is 1.64 times less risky than Direxion Daily. The crypto coin trades about -0.11 of its potential returns per unit of risk. The Direxion Daily MU is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,745  in Direxion Daily MU on October 26, 2024 and sell it today you would earn a total of  564.00  from holding Direxion Daily MU or generate 32.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Astar  vs.  Direxion Daily MU

Astar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Direxion Daily MU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily MU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Direxion Daily is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Astar and Direxion Daily

The main advantage of trading using opposite Astar and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.

The idea behind Astar and Direxion Daily MU 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..