Correlation Between Direxion Daily and Harbor International
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Harbor International 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 Harbor International 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 Harbor International Small, you can compare the effects of market volatilities on Direxion Daily and Harbor International 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 Harbor International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Harbor International.
Diversification Opportunities for Direxion Daily and Harbor International
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Direxion and Harbor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Harbor International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor International 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 Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Direxion Daily i.e., Direxion Daily and Harbor International go up and down completely randomly.
Pair Corralation between Direxion Daily and Harbor International
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Harbor International. In addition to that, Direxion Daily is 3.59 times more volatile than Harbor International Small. It trades about -0.15 of its total potential returns per unit of risk. Harbor International Small is currently generating about 0.01 per unit of volatility. If you would invest 1,403 in Harbor International Small on December 1, 2024 and sell it today you would earn a total of 5.00 from holding Harbor International Small or generate 0.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Direxion Daily Mid vs. Harbor International Small
Performance |
Timeline |
Direxion Daily Mid |
Harbor International |
Direxion Daily and Harbor International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Harbor International
The main advantage of trading using opposite Direxion Daily and Harbor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Harbor International 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 Harbor International will offset losses from the drop in Harbor International'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 |
Harbor International vs. Lord Abbett Affiliated | Harbor International vs. Blackrock Large Cap | Harbor International vs. Guidemark Large Cap | Harbor International vs. Qs Large Cap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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