Correlation Between Direxion Daily and Red Planet

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

Diversification Opportunities for Direxion Daily and Red Planet

-0.03

Correlation Coefficient

Direxion Daily  Red Planet

Good diversification

The 3 months correlation between Direxion and Red is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Red Planet Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Planet Indonesia 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 Red Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Planet Indonesia has no effect on the direction of Direxion Daily i.e., Direxion Daily and Red Planet go up and down completely randomly.

Pair Corralation between Direxion Daily and Red Planet

Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Red Planet. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.88 times less risky than Red Planet. The etf trades about -0.11 of its potential returns per unit of risk. The Red Planet Indonesia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,200  in Red Planet Indonesia on December 29, 2024 and sell it today you would earn a total of  300.00  from holding Red Planet Indonesia or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Direxion Daily Mid  vs.  Red Planet Indonesia

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.

Red Planet Indonesia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Red Planet Indonesia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Red Planet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Red Planet

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

The idea behind Direxion Daily Mid and Red Planet Indonesia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.