Correlation Between Direxion Daily and Clal Industries

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

Diversification Opportunities for Direxion Daily and Clal Industries

0.73

Correlation Coefficient

Direxion Daily  Clal Industries

Poor diversification

The 3 months correlation between Direxion and Clal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Clal Industries and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clal Industries 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 Clal Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clal Industries has no effect on the direction of Direxion Daily i.e., Direxion Daily and Clal Industries go up and down completely randomly.

Pair Corralation between Direxion Daily and Clal Industries

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.23 times more return on investment than Clal Industries. However, Direxion Daily is 1.23 times more volatile than Clal Industries and. It trades about 0.05 of its potential returns per unit of risk. Clal Industries and is currently generating about 0.02 per unit of risk. If you would invest  3,403  in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of  2,865  from holding Direxion Daily Mid or generate 84.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.78%
Values	Daily Returns

Direxion Daily Mid  vs.  Clal Industries and

Direxion Daily Mid

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 12 (%) 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.

Clal Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Industries and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Clal Industries

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

The idea behind Direxion Daily Mid and Clal Industries and 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.