Correlation Between Direxion Daily and Group 6

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Group 6 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 Group 6 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 Group 6 Metals, you can compare the effects of market volatilities on Direxion Daily and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Group 6.

Diversification Opportunities for Direxion Daily and Group 6

0.26

Correlation Coefficient

Direxion Daily  Group 6

Modest diversification

The 3 months correlation between Direxion and Group is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 Metals 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of Direxion Daily i.e., Direxion Daily and Group 6 go up and down completely randomly.

Pair Corralation between Direxion Daily and Group 6

If you would invest  6,362  in Direxion Daily Mid on September 9, 2024 and sell it today you would earn a total of  136.00  from holding Direxion Daily Mid or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Direxion Daily Mid  vs.  Group 6 Metals

Direxion Daily Mid

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 15 (%) 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.

Group 6 Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group 6 Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Group 6 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Direxion Daily and Group 6

The main advantage of trading using opposite Direxion Daily and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.

The idea behind Direxion Daily Mid and Group 6 Metals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.