Correlation Between Direxion Daily and Braskem SA

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

Diversification Opportunities for Direxion Daily and Braskem SA

0.2

Correlation Coefficient

Direxion Daily  Braskem SA

Modest diversification

The 3 months correlation between Direxion and Braskem is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Braskem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braskem SA 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 Braskem SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braskem SA has no effect on the direction of Direxion Daily i.e., Direxion Daily and Braskem SA go up and down completely randomly.

Pair Corralation between Direxion Daily and Braskem SA

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Braskem SA. In addition to that, Direxion Daily is 1.56 times more volatile than Braskem SA. It trades about -0.1 of its total potential returns per unit of risk. Braskem SA is currently generating about 0.09 per unit of volatility. If you would invest  703.00  in Braskem SA on December 30, 2024 and sell it today you would earn a total of  72.00  from holding Braskem SA or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Mid  vs.  Braskem SA

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.

Braskem SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Braskem SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Braskem SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Direxion Daily and Braskem SA

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

The idea behind Direxion Daily Mid and Braskem SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.