Correlation Between Direxion Daily and Australian High

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

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

Diversification Opportunities for Direxion Daily and Australian High

-0.68

Correlation Coefficient

Direxion Daily  Australian High

Excellent diversification

The 3 months correlation between Direxion and Australian is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Australian High Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian High Interest 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 Mid are associated (or correlated) with Australian High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian High Interest has no effect on the direction of Direxion Daily i.e., Direxion Daily and Australian High go up and down completely randomly.

Pair Corralation between Direxion Daily and Australian High

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Australian High. In addition to that, Direxion Daily is 151.21 times more volatile than Australian High Interest. It trades about -0.11 of its total potential returns per unit of risk. Australian High Interest is currently generating about 0.78 per unit of volatility. If you would invest  4,974  in Australian High Interest on December 29, 2024 and sell it today you would earn a total of  53.00  from holding Australian High Interest or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Direxion Daily Mid  vs.  Australian High Interest

Direxion Daily Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily Mid 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 fundamental 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.

Australian High Interest

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Australian High Interest are ranked lower than 61 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Australian High is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Direxion Daily and Australian High

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

The idea behind Direxion Daily Mid and Australian High Interest 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.