Correlation Between Direxion Daily and Intertech

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

Diversification Opportunities for Direxion Daily and Intertech

-0.7

Correlation Coefficient

Direxion Daily  Intertech

Excellent diversification

The 3 months correlation between Direxion and Intertech is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter 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 Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of Direxion Daily i.e., Direxion Daily and Intertech go up and down completely randomly.

Pair Corralation between Direxion Daily and Intertech

Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.17 times more return on investment than Intertech. However, Direxion Daily is 1.17 times more volatile than Intertech SA Inter. It trades about 0.13 of its potential returns per unit of risk. Intertech SA Inter is currently generating about -0.1 per unit of risk. If you would invest  5,085  in Direxion Daily Mid on September 13, 2024 and sell it today you would earn a total of  1,183  from holding Direxion Daily Mid or generate 23.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Direxion Daily Mid  vs.  Intertech SA Inter

Direxion Daily Mid

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 10 (%) 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.

Intertech SA Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertech SA Inter has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Direxion Daily and Intertech

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

The idea behind Direxion Daily Mid and Intertech SA Inter 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.