Correlation Between Boeing and Direxion Monthly

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

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

Diversification Opportunities for Boeing and Direxion Monthly

-0.66

Correlation Coefficient

Boeing  Direxion Monthly

Excellent diversification

The 3 months correlation between Boeing and Direxion is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Direxion Monthly Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly and Boeing 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 The Boeing are associated (or correlated) with Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly has no effect on the direction of Boeing i.e., Boeing and Direxion Monthly go up and down completely randomly.

Pair Corralation between Boeing and Direxion Monthly

Allowing for the 90-day total investment horizon The Boeing is expected to generate 0.91 times more return on investment than Direxion Monthly. However, The Boeing is 1.1 times less risky than Direxion Monthly. It trades about 0.16 of its potential returns per unit of risk. Direxion Monthly Sp is currently generating about -0.07 per unit of risk. If you would invest  15,100  in The Boeing on October 6, 2024 and sell it today you would earn a total of  1,890  from holding The Boeing or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Boeing  vs.  Direxion Monthly Sp

Boeing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Direxion Monthly

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Monthly Sp has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Direxion Monthly is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and Direxion Monthly

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

The idea behind The Boeing and Direxion Monthly Sp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.