Correlation Between Direxion Daily and CIBC Qx

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

Diversification Opportunities for Direxion Daily and CIBC Qx

-0.48

Correlation Coefficient

Direxion Daily  CIBC Qx

Very good diversification

The 3 months correlation between Direxion and CIBC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and CIBC Qx Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBC Qx Low 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 CIBC Qx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBC Qx Low has no effect on the direction of Direxion Daily i.e., Direxion Daily and CIBC Qx go up and down completely randomly.

Pair Corralation between Direxion Daily and CIBC Qx

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the CIBC Qx. In addition to that, Direxion Daily is 1.32 times more volatile than CIBC Qx Low. It trades about -0.1 of its total potential returns per unit of risk. CIBC Qx Low is currently generating about -0.07 per unit of volatility. If you would invest  2,348  in CIBC Qx Low on December 30, 2024 and sell it today you would lose (274.00) from holding CIBC Qx Low or give up 11.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Direxion Daily Mid  vs.  CIBC Qx Low

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.

CIBC Qx Low

Risk-Adjusted Performance

Very Weak

Over the last 90 days CIBC Qx Low has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Direxion Daily and CIBC Qx

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

The idea behind Direxion Daily Mid and CIBC Qx Low 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.