Correlation Between Direxion Daily and Chemours

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

By analyzing existing cross correlation between Direxion Daily FTSE and Chemours Co, you can compare the effects of market volatilities on Direxion Daily and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Chemours.

Diversification Opportunities for Direxion Daily and Chemours

-0.69

Correlation Coefficient

Direxion Daily  Chemours

Excellent diversification

The 3 months correlation between Direxion and Chemours is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 FTSE are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Direxion Daily i.e., Direxion Daily and Chemours go up and down completely randomly.

Pair Corralation between Direxion Daily and Chemours

Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 0.92 times more return on investment than Chemours. However, Direxion Daily FTSE is 1.09 times less risky than Chemours. It trades about 0.19 of its potential returns per unit of risk. Chemours Co is currently generating about -0.08 per unit of risk. If you would invest  2,037  in Direxion Daily FTSE on December 30, 2024 and sell it today you would earn a total of  726.00  from holding Direxion Daily FTSE or generate 35.64% return on investment over 90 days.

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

Direxion Daily FTSE  vs.  Chemours Co

Direxion Daily FTSE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily FTSE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Direxion Daily disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chemours

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Direxion Daily and Chemours

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

The idea behind Direxion Daily FTSE and Chemours Co 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.