Correlation Between Direxion Daily and Nordic Aqua
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Nordic Aqua 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 Nordic Aqua 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 Nordic Aqua Partners, you can compare the effects of market volatilities on Direxion Daily and Nordic Aqua 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 Nordic Aqua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Nordic Aqua.
Diversification Opportunities for Direxion Daily and Nordic Aqua
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Nordic is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Nordic Aqua Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Aqua Partners 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 Nordic Aqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Aqua Partners has no effect on the direction of Direxion Daily i.e., Direxion Daily and Nordic Aqua go up and down completely randomly.
Pair Corralation between Direxion Daily and Nordic Aqua
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Nordic Aqua. In addition to that, Direxion Daily is 1.44 times more volatile than Nordic Aqua Partners. It trades about -0.09 of its total potential returns per unit of risk. Nordic Aqua Partners is currently generating about 0.12 per unit of volatility. If you would invest 7,400 in Nordic Aqua Partners on December 27, 2024 and sell it today you would earn a total of 1,250 from holding Nordic Aqua Partners or generate 16.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.83% |
Values | Daily Returns |
Direxion Daily Mid vs. Nordic Aqua Partners
Performance |
Timeline |
Direxion Daily Mid |
Nordic Aqua Partners |
Direxion Daily and Nordic Aqua Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Nordic Aqua
The main advantage of trading using opposite Direxion Daily and Nordic Aqua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Nordic Aqua 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 Nordic Aqua will offset losses from the drop in Nordic Aqua'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 |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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