Correlation Between Direxion Daily and Payden Global
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Payden Global 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 Payden Global 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 Payden Global Low, you can compare the effects of market volatilities on Direxion Daily and Payden Global 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 Payden Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Payden Global.
Diversification Opportunities for Direxion Daily and Payden Global
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and Payden is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Payden Global Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Global Low 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 Payden Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Global Low has no effect on the direction of Direxion Daily i.e., Direxion Daily and Payden Global go up and down completely randomly.
Pair Corralation between Direxion Daily and Payden Global
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 24.81 times more return on investment than Payden Global. However, Direxion Daily is 24.81 times more volatile than Payden Global Low. It trades about 0.22 of its potential returns per unit of risk. Payden Global Low is currently generating about 0.0 per unit of risk. If you would invest 4,627 in Direxion Daily Mid on September 6, 2024 and sell it today you would earn a total of 2,035 from holding Direxion Daily Mid or generate 43.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Direxion Daily Mid vs. Payden Global Low
Performance |
Timeline |
Direxion Daily Mid |
Payden Global Low |
Direxion Daily and Payden Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Payden Global
The main advantage of trading using opposite Direxion Daily and Payden Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Payden Global 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 Payden Global will offset losses from the drop in Payden Global'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 |
Payden Global vs. Blackrock Health Sciences | Payden Global vs. Allianzgi Health Sciences | Payden Global vs. Health Biotchnology Portfolio | Payden Global vs. Baillie Gifford Health |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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