Correlation Between Direxion Daily and Perion Network

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

Diversification Opportunities for Direxion Daily and Perion Network

0.64

Correlation Coefficient

Direxion Daily  Perion Network

Poor diversification

The 3 months correlation between Direxion and Perion is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Perion Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perion Network 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 Perion Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perion Network has no effect on the direction of Direxion Daily i.e., Direxion Daily and Perion Network go up and down completely randomly.

Pair Corralation between Direxion Daily and Perion Network

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Perion Network. In addition to that, Direxion Daily is 1.28 times more volatile than Perion Network. It trades about -0.11 of its total potential returns per unit of risk. Perion Network is currently generating about -0.01 per unit of volatility. If you would invest  848.00  in Perion Network on December 29, 2024 and sell it today you would lose (34.00) from holding Perion Network or give up 4.01% of portfolio value over 90 days.

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

Direxion Daily Mid  vs.  Perion Network

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.

Perion Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perion Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Perion Network is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Direxion Daily and Perion Network

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

The idea behind Direxion Daily Mid and Perion Network 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.