Correlation Between Horizon Kinetics and Direxion Daily

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

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

Diversification Opportunities for Horizon Kinetics and Direxion Daily

0.52

Correlation Coefficient

Horizon Kinetics  Direxion Daily

Very weak diversification

The 3 months correlation between Horizon and Direxion is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Medical and Direxion Daily Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Regional and Horizon Kinetics 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 Horizon Kinetics Medical 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 Regional has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Direxion Daily go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Direxion Daily

Given the investment horizon of 90 days Horizon Kinetics Medical is expected to generate 0.22 times more return on investment than Direxion Daily. However, Horizon Kinetics Medical is 4.58 times less risky than Direxion Daily. It trades about 0.06 of its potential returns per unit of risk. Direxion Daily Regional is currently generating about -0.12 per unit of risk. If you would invest  2,792  in Horizon Kinetics Medical on November 28, 2024 and sell it today you would earn a total of  78.00  from holding Horizon Kinetics Medical or generate 2.79% return on investment over 90 days.

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

Horizon Kinetics Medical  vs.  Direxion Daily Regional

Horizon Kinetics Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Horizon Kinetics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Horizon Kinetics and Direxion Daily

The main advantage of trading using opposite Horizon Kinetics and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Kinetics 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 Horizon Kinetics Medical and Direxion Daily Regional 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.