Correlation Between Direxion Daily and Bank Danamon
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Bank Danamon 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 Bank Danamon 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 Bank Danamon Indonesia, you can compare the effects of market volatilities on Direxion Daily and Bank Danamon 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 Bank Danamon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Bank Danamon.
Diversification Opportunities for Direxion Daily and Bank Danamon
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Direxion and Bank is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Bank Danamon Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Danamon Indonesia 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 Bank Danamon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Danamon Indonesia has no effect on the direction of Direxion Daily i.e., Direxion Daily and Bank Danamon go up and down completely randomly.
Pair Corralation between Direxion Daily and Bank Danamon
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Bank Danamon. In addition to that, Direxion Daily is 2.63 times more volatile than Bank Danamon Indonesia. It trades about -0.15 of its total potential returns per unit of risk. Bank Danamon Indonesia is currently generating about -0.12 per unit of volatility. If you would invest 256,000 in Bank Danamon Indonesia on December 1, 2024 and sell it today you would lose (19,000) from holding Bank Danamon Indonesia or give up 7.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 96.67% |
Values | Daily Returns |
Direxion Daily Mid vs. Bank Danamon Indonesia
Performance |
Timeline |
Direxion Daily Mid |
Bank Danamon Indonesia |
Direxion Daily and Bank Danamon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Bank Danamon
The main advantage of trading using opposite Direxion Daily and Bank Danamon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Bank Danamon 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 Bank Danamon will offset losses from the drop in Bank Danamon's long position.Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
Bank Danamon vs. Bank Cimb Niaga | Bank Danamon vs. Indosat Tbk | Bank Danamon vs. Astra Agro Lestari | Bank Danamon vs. Bank Mandiri Persero |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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