Correlation Between Direxion Daily and Inverse Mid-cap
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Inverse Mid-cap 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 Inverse Mid-cap 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 Inverse Mid Cap Strategy, you can compare the effects of market volatilities on Direxion Daily and Inverse Mid-cap 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 Inverse Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Inverse Mid-cap.
Diversification Opportunities for Direxion Daily and Inverse Mid-cap
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Direxion and Inverse is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Inverse Mid Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Mid Cap 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 Inverse Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Mid Cap has no effect on the direction of Direxion Daily i.e., Direxion Daily and Inverse Mid-cap go up and down completely randomly.
Pair Corralation between Direxion Daily and Inverse Mid-cap
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Inverse Mid-cap. In addition to that, Direxion Daily is 2.99 times more volatile than Inverse Mid Cap Strategy. It trades about -0.1 of its total potential returns per unit of risk. Inverse Mid Cap Strategy is currently generating about 0.12 per unit of volatility. If you would invest 3,952 in Inverse Mid Cap Strategy on December 30, 2024 and sell it today you would earn a total of 315.00 from holding Inverse Mid Cap Strategy or generate 7.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily Mid vs. Inverse Mid Cap Strategy
Performance |
Timeline |
Direxion Daily Mid |
Inverse Mid Cap |
Direxion Daily and Inverse Mid-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Inverse Mid-cap
The main advantage of trading using opposite Direxion Daily and Inverse Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Inverse Mid-cap 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 Inverse Mid-cap will offset losses from the drop in Inverse Mid-cap'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 |
Inverse Mid-cap vs. Mirova Global Green | Inverse Mid-cap vs. Franklin Mutual Global | Inverse Mid-cap vs. Summit Global Investments | Inverse Mid-cap vs. Dws Global Macro |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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