Correlation Between Direxion Daily and Ballard Power

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

Diversification Opportunities for Direxion Daily and Ballard Power

-0.03

Correlation Coefficient

Direxion Daily  Ballard Power

Good diversification

The 3 months correlation between Direxion and Ballard is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems 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 Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Direxion Daily i.e., Direxion Daily and Ballard Power go up and down completely randomly.

Pair Corralation between Direxion Daily and Ballard Power

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Ballard Power. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.5 times less risky than Ballard Power. The etf trades about -0.15 of its potential returns per unit of risk. The Ballard Power Systems is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Ballard Power Systems on December 2, 2024 and sell it today you would lose (41.00) from holding Ballard Power Systems or give up 18.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Direxion Daily Mid  vs.  Ballard Power Systems

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.

Ballard Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Direxion Daily and Ballard Power

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

The idea behind Direxion Daily Mid and Ballard Power Systems 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.