Correlation Between Direxion Daily and Steward Covered
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Steward Covered 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 Steward Covered 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 Steward Ered Call, you can compare the effects of market volatilities on Direxion Daily and Steward Covered 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 Steward Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Steward Covered.
Diversification Opportunities for Direxion Daily and Steward Covered
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Steward is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Steward Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward Ered Call 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 Steward Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward Ered Call has no effect on the direction of Direxion Daily i.e., Direxion Daily and Steward Covered go up and down completely randomly.
Pair Corralation between Direxion Daily and Steward Covered
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 6.35 times more return on investment than Steward Covered. However, Direxion Daily is 6.35 times more volatile than Steward Ered Call. It trades about 0.22 of its potential returns per unit of risk. Steward Ered Call is currently generating about 0.25 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 Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily Mid vs. Steward Ered Call
Performance |
Timeline |
Direxion Daily Mid |
Steward Ered Call |
Direxion Daily and Steward Covered Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Steward Covered
The main advantage of trading using opposite Direxion Daily and Steward Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Steward Covered 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 Steward Covered will offset losses from the drop in Steward Covered'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 |
Steward Covered vs. Hood River New | Steward Covered vs. T Rowe Price | Steward Covered vs. Qs Moderate Growth | Steward Covered vs. Jp Morgan Smartretirement |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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