Correlation Between Direxion Daily and SOGU

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

By analyzing existing cross correlation between Direxion Daily Semiconductor and SOGU, you can compare the effects of market volatilities on Direxion Daily and SOGU 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 SOGU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and SOGU.

Diversification Opportunities for Direxion Daily and SOGU

-0.01

Correlation Coefficient

Direxion Daily  SOGU

Good diversification

The 3 months correlation between Direxion and SOGU is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Semiconductor and SOGU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGU 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 Semiconductor are associated (or correlated) with SOGU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGU has no effect on the direction of Direxion Daily i.e., Direxion Daily and SOGU go up and down completely randomly.

Pair Corralation between Direxion Daily and SOGU

If you would invest  2,043  in Direxion Daily Semiconductor on October 16, 2024 and sell it today you would earn a total of  116.00  from holding Direxion Daily Semiconductor or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Direxion Daily Semiconductor  vs.  SOGU

Direxion Daily Semic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Semiconductor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

SOGU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGU has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, SOGU is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Direxion Daily and SOGU

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

The idea behind Direxion Daily Semiconductor and SOGU 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.