Correlation Between Direxion Daily and Carl Zeiss

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

Diversification Opportunities for Direxion Daily and Carl Zeiss

-0.65

Correlation Coefficient

Direxion Daily  Carl Zeiss

Excellent diversification

The 3 months correlation between Direxion and Carl is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec 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 Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Direxion Daily i.e., Direxion Daily and Carl Zeiss go up and down completely randomly.

Pair Corralation between Direxion Daily and Carl Zeiss

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Carl Zeiss. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.15 times less risky than Carl Zeiss. The etf trades about -0.11 of its potential returns per unit of risk. The Carl Zeiss Meditec is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,733  in Carl Zeiss Meditec on December 29, 2024 and sell it today you would earn a total of  2,269  from holding Carl Zeiss Meditec or generate 47.94% return on investment over 90 days.

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

Direxion Daily Mid  vs.  Carl Zeiss Meditec

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.

Carl Zeiss Meditec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carl Zeiss Meditec are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Carl Zeiss showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Carl Zeiss

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

The idea behind Direxion Daily Mid and Carl Zeiss Meditec 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..