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
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and Ballard is 0.46. 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 generate 0.77 times more return on investment than Ballard Power. However, Direxion Daily Mid is 1.3 times less risky than Ballard Power. It trades about -0.1 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.12 per unit of risk. If you would invest 5,228 in Direxion Daily Mid on December 30, 2024 and sell it today you would lose (1,124) from holding Direxion Daily Mid or give up 21.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.88% |
Values | Daily Returns |
Direxion Daily Mid vs. Ballard Power Systems
Performance |
Timeline |
Direxion Daily Mid |
Ballard Power Systems |
Direxion Daily and Ballard Power Volatility Contrast
Predicted Return Density |
Returns |
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.Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
Ballard Power vs. Pace Metals | Ballard Power vs. High Liner Foods | Ballard Power vs. Ramp Metals | Ballard Power vs. Nicola Mining |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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