Correlation Between Direxion Monthly and Allianzgi Global

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

By analyzing existing cross correlation between Direxion Monthly Nasdaq 100 and Allianzgi Global Allocation, you can compare the effects of market volatilities on Direxion Monthly and Allianzgi Global 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 Monthly with a short position of Allianzgi Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Monthly and Allianzgi Global.

Diversification Opportunities for Direxion Monthly and Allianzgi Global

0.34

Correlation Coefficient

Direxion Monthly  Allianzgi Global

Weak diversification

The 3 months correlation between Direxion and Allianzgi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Monthly Nasdaq 100 and Allianzgi Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Global All and Direxion Monthly 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 Monthly Nasdaq 100 are associated (or correlated) with Allianzgi Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Global All has no effect on the direction of Direxion Monthly i.e., Direxion Monthly and Allianzgi Global go up and down completely randomly.

Pair Corralation between Direxion Monthly and Allianzgi Global

Assuming the 90 days horizon Direxion Monthly Nasdaq 100 is expected to under-perform the Allianzgi Global. In addition to that, Direxion Monthly is 3.4 times more volatile than Allianzgi Global Allocation. It trades about -0.05 of its total potential returns per unit of risk. Allianzgi Global Allocation is currently generating about -0.08 per unit of volatility. If you would invest  1,041  in Allianzgi Global Allocation on December 3, 2024 and sell it today you would lose (32.00) from holding Allianzgi Global Allocation or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Direxion Monthly Nasdaq 100  vs.  Allianzgi Global Allocation

Direxion Monthly Nasdaq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Monthly Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Allianzgi Global All

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Direxion Monthly and Allianzgi Global

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

The idea behind Direxion Monthly Nasdaq 100 and Allianzgi Global Allocation 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.