Correlation Between UBS AG and Direxion Daily

Can any of the company-specific risk be diversified away by investing in both UBS AG and Direxion Daily 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 UBS AG and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS AG London and Direxion Daily SP, you can compare the effects of market volatilities on UBS AG and Direxion Daily 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 UBS AG with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AG and Direxion Daily.

Diversification Opportunities for UBS AG and Direxion Daily

-0.78

Correlation Coefficient

UBS AG  Direxion Daily

Pay attention - limited upside

The 3 months correlation between UBS and Direxion is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and Direxion Daily SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily SP and UBS AG 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 UBS AG London are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily SP has no effect on the direction of UBS AG i.e., UBS AG and Direxion Daily go up and down completely randomly.

Pair Corralation between UBS AG and Direxion Daily

Given the investment horizon of 90 days UBS AG London is expected to generate 0.28 times more return on investment than Direxion Daily. However, UBS AG London is 3.51 times less risky than Direxion Daily. It trades about 0.23 of its potential returns per unit of risk. Direxion Daily SP is currently generating about -0.09 per unit of risk. If you would invest  2,362  in UBS AG London on September 4, 2024 and sell it today you would earn a total of  310.00  from holding UBS AG London or generate 13.12% return on investment over 90 days.

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

UBS AG London  vs.  Direxion Daily SP

UBS AG London

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UBS AG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Direxion Daily SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily SP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Etf's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with UBS AG and Direxion Daily

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

The idea behind UBS AG London and Direxion Daily SP 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 Commodity Directory module to find actively traded commodities issued by global exchanges.