Correlation Between Direxion Daily and Amg Gwk

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

Diversification Opportunities for Direxion Daily and Amg Gwk

1.0

Correlation Coefficient

Direxion Daily  Amg Gwk

No risk reduction

The 3 months correlation between Direxion and Amg is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Amg Gwk Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Gwk Smallmid 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 Amg Gwk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Gwk Smallmid has no effect on the direction of Direxion Daily i.e., Direxion Daily and Amg Gwk go up and down completely randomly.

Pair Corralation between Direxion Daily and Amg Gwk

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Amg Gwk. In addition to that, Direxion Daily is 3.02 times more volatile than Amg Gwk Smallmid. It trades about -0.08 of its total potential returns per unit of risk. Amg Gwk Smallmid is currently generating about -0.09 per unit of volatility. If you would invest  1,896  in Amg Gwk Smallmid on December 28, 2024 and sell it today you would lose (117.00) from holding Amg Gwk Smallmid or give up 6.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Mid  vs.  Amg Gwk Smallmid

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.

Amg Gwk Smallmid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amg Gwk Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Direxion Daily and Amg Gwk

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

The idea behind Direxion Daily Mid and Amg Gwk Smallmid 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.