Correlation Between Direxion Daily and ICOS

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

Diversification Opportunities for Direxion Daily and ICOS

0.0

Correlation Coefficient

Direxion Daily  ICOS

Pay attention - limited upside

The 3 months correlation between Direxion and ICOS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and ICOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICOS 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 ICOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICOS has no effect on the direction of Direxion Daily i.e., Direxion Daily and ICOS go up and down completely randomly.

Pair Corralation between Direxion Daily and ICOS

If you would invest (100.00) in ICOS on December 27, 2024 and sell it today you would earn a total of  100.00  from holding ICOS or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Direxion Daily Mid  vs.  ICOS

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.

ICOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICOS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ICOS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Direxion Daily and ICOS

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

The idea behind Direxion Daily Mid and ICOS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.