Correlation Between Direxion Daily and Bank Victoria

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

Diversification Opportunities for Direxion Daily and Bank Victoria

0.45

Correlation Coefficient

Direxion Daily  Bank Victoria

Very weak diversification

The 3 months correlation between Direxion and Bank is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Bank Victoria International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Victoria Intern 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 Victoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Victoria Intern has no effect on the direction of Direxion Daily i.e., Direxion Daily and Bank Victoria go up and down completely randomly.

Pair Corralation between Direxion Daily and Bank Victoria

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.01 times more return on investment than Bank Victoria. However, Direxion Daily is 1.01 times more volatile than Bank Victoria International. It trades about 0.06 of its potential returns per unit of risk. Bank Victoria International is currently generating about 0.05 per unit of risk. If you would invest  5,320  in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of  1,412  from holding Direxion Daily Mid or generate 26.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.98%
Values	Daily Returns

Direxion Daily Mid  vs.  Bank Victoria International

Direxion Daily Mid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank Victoria Intern

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Victoria International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Victoria disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Bank Victoria

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

The idea behind Direxion Daily Mid and Bank Victoria International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.