Correlation Between Direxion Daily and Catalyst Intelligent

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Catalyst Intelligent 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 Catalyst Intelligent 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 Catalyst Intelligent Alternative, you can compare the effects of market volatilities on Direxion Daily and Catalyst Intelligent 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 Catalyst Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Catalyst Intelligent.

Diversification Opportunities for Direxion Daily and Catalyst Intelligent

0.21

Correlation Coefficient

Direxion Daily  Catalyst Intelligent

Modest diversification

The 3 months correlation between Direxion and Catalyst is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Catalyst Intelligent Alternati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Intelligent 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 Catalyst Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Intelligent has no effect on the direction of Direxion Daily i.e., Direxion Daily and Catalyst Intelligent go up and down completely randomly.

Pair Corralation between Direxion Daily and Catalyst Intelligent

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Catalyst Intelligent. In addition to that, Direxion Daily is 2.61 times more volatile than Catalyst Intelligent Alternative. It trades about -0.15 of its total potential returns per unit of risk. Catalyst Intelligent Alternative is currently generating about -0.1 per unit of volatility. If you would invest  1,088  in Catalyst Intelligent Alternative on December 2, 2024 and sell it today you would lose (69.00) from holding Catalyst Intelligent Alternative or give up 6.34% 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 Mid  vs.  Catalyst Intelligent Alternati

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.

Catalyst Intelligent

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Direxion Daily and Catalyst Intelligent

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

The idea behind Direxion Daily Mid and Catalyst Intelligent Alternative 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.