Correlation Between Direxion Daily and Guinness Atkinson

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

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

Diversification Opportunities for Direxion Daily and Guinness Atkinson

0.3

Correlation Coefficient

Direxion Daily  Guinness Atkinson

Weak diversification

The 3 months correlation between Direxion and Guinness is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Regional and Guinness Atkinson Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Funds and Direxion Daily 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 Direxion Daily Regional are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Funds has no effect on the direction of Direxion Daily i.e., Direxion Daily and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Direxion Daily and Guinness Atkinson

Given the investment horizon of 90 days Direxion Daily Regional is expected to under-perform the Guinness Atkinson. In addition to that, Direxion Daily is 3.65 times more volatile than Guinness Atkinson Funds. It trades about -0.07 of its total potential returns per unit of risk. Guinness Atkinson Funds is currently generating about -0.05 per unit of volatility. If you would invest  2,461  in Guinness Atkinson Funds on December 30, 2024 and sell it today you would lose (100.00) from holding Guinness Atkinson Funds or give up 4.06% of portfolio value over 90 days.

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

Direxion Daily Regional  vs.  Guinness Atkinson Funds

Direxion Daily Regional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Regional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Guinness Atkinson Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guinness Atkinson Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Guinness Atkinson is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Direxion Daily and Guinness Atkinson

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

The idea behind Direxion Daily Regional and Guinness Atkinson Funds 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.