Correlation Between Direxion Daily and Fidelity Canadian
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Fidelity Canadian 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 Fidelity Canadian 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 Fidelity Canadian High, you can compare the effects of market volatilities on Direxion Daily and Fidelity Canadian 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 Fidelity Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Fidelity Canadian.
Diversification Opportunities for Direxion Daily and Fidelity Canadian
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Fidelity Canadian High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian High 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 Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian High has no effect on the direction of Direxion Daily i.e., Direxion Daily and Fidelity Canadian go up and down completely randomly.
Pair Corralation between Direxion Daily and Fidelity Canadian
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 5.6 times more return on investment than Fidelity Canadian. However, Direxion Daily is 5.6 times more volatile than Fidelity Canadian High. It trades about 0.16 of its potential returns per unit of risk. Fidelity Canadian High is currently generating about 0.3 per unit of risk. If you would invest 4,835 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 1,433 from holding Direxion Daily Mid or generate 29.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily Mid vs. Fidelity Canadian High
Performance |
Timeline |
Direxion Daily Mid |
Fidelity Canadian High |
Direxion Daily and Fidelity Canadian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Fidelity Canadian
The main advantage of trading using opposite Direxion Daily and Fidelity Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Fidelity Canadian 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 Fidelity Canadian will offset losses from the drop in Fidelity Canadian's long position.Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
Fidelity Canadian vs. Fidelity Canadian High | Fidelity Canadian vs. Fidelity High Quality | Fidelity Canadian vs. Fidelity Canadian Value | Fidelity Canadian vs. Fidelity High Dividend |
Check out your portfolio center.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..
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