Correlation Between Abrdn Bloomberg and Direxion Daily

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

By analyzing existing cross correlation between abrdn Bloomberg All and Direxion Daily 7 10, you can compare the effects of market volatilities on Abrdn Bloomberg 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 Abrdn Bloomberg with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Bloomberg and Direxion Daily.

Diversification Opportunities for Abrdn Bloomberg and Direxion Daily

-0.36

Correlation Coefficient

Abrdn Bloomberg  Direxion Daily

Very good diversification

The 3 months correlation between Abrdn and Direxion is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Bloomberg All and Direxion Daily 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily 7 and Abrdn Bloomberg 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 abrdn Bloomberg All 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 7 has no effect on the direction of Abrdn Bloomberg i.e., Abrdn Bloomberg and Direxion Daily go up and down completely randomly.

Pair Corralation between Abrdn Bloomberg and Direxion Daily

Considering the 90-day investment horizon abrdn Bloomberg All is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, abrdn Bloomberg All is 2.0 times less risky than Direxion Daily. The etf trades about -0.02 of its potential returns per unit of risk. The Direxion Daily 7 10 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,243  in Direxion Daily 7 10 on September 20, 2024 and sell it today you would earn a total of  250.81  from holding Direxion Daily 7 10 or generate 20.18% return on investment over 90 days.

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

abrdn Bloomberg All  vs.  Direxion Daily 7 10

abrdn Bloomberg All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Direxion Daily 7

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily 7 10 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Direxion Daily displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abrdn Bloomberg and Direxion Daily

The main advantage of trading using opposite Abrdn Bloomberg and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Bloomberg 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 abrdn Bloomberg All and Direxion Daily 7 10 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.