Correlation Between Direxion Daily and Mitsubishi UFJ

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

Diversification Opportunities for Direxion Daily and Mitsubishi UFJ

-0.68

Correlation Coefficient

Direxion Daily  Mitsubishi UFJ

Excellent diversification

The 3 months correlation between Direxion and Mitsubishi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Direxion Daily i.e., Direxion Daily and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Direxion Daily and Mitsubishi UFJ

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Mitsubishi UFJ. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.02 times less risky than Mitsubishi UFJ. The etf trades about -0.1 of its potential returns per unit of risk. The Mitsubishi UFJ Lease is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,283  in Mitsubishi UFJ Lease on December 30, 2024 and sell it today you would earn a total of  112.00  from holding Mitsubishi UFJ Lease or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.71%
Values	Daily Returns

Direxion Daily Mid  vs.  Mitsubishi UFJ Lease

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.

Mitsubishi UFJ Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mitsubishi UFJ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Mitsubishi UFJ

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

The idea behind Direxion Daily Mid and Mitsubishi UFJ Lease 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.