Correlation Between SonicShares Global and Direxion Daily

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

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

Diversification Opportunities for SonicShares Global and Direxion Daily

-0.68

Correlation Coefficient

SonicShares Global  Direxion Daily

Excellent diversification

The 3 months correlation between SonicShares and Direxion is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SonicShares Global Shipping 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 SonicShares Global 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 SonicShares Global Shipping 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 SonicShares Global i.e., SonicShares Global and Direxion Daily go up and down completely randomly.

Pair Corralation between SonicShares Global and Direxion Daily

Given the investment horizon of 90 days SonicShares Global Shipping is expected to under-perform the Direxion Daily. But the etf apears to be less risky and, when comparing its historical volatility, SonicShares Global Shipping is 1.52 times less risky than Direxion Daily. The etf trades about -0.11 of its potential returns per unit of risk. The Direxion Daily Travel is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,642  in Direxion Daily Travel on October 14, 2024 and sell it today you would earn a total of  195.00  from holding Direxion Daily Travel or generate 11.88% return on investment over 90 days.

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

SonicShares Global Shipping  vs.  Direxion Daily Travel

SonicShares Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SonicShares Global Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Direxion Daily Travel

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with SonicShares Global and Direxion Daily

The main advantage of trading using opposite SonicShares Global and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SonicShares Global 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 SonicShares Global Shipping and Direxion Daily Travel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.