Correlation Between Direxion Shares and AXS TSLA

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

By analyzing existing cross correlation between Direxion Shares ETF and AXS TSLA Bear, you can compare the effects of market volatilities on Direxion Shares and AXS TSLA 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 Shares with a short position of AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Shares and AXS TSLA.

Diversification Opportunities for Direxion Shares and AXS TSLA

-0.79

Correlation Coefficient

Direxion Shares  AXS TSLA

Pay attention - limited upside

The 3 months correlation between Direxion and AXS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Shares ETF and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear and Direxion Shares 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 Shares ETF are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of Direxion Shares i.e., Direxion Shares and AXS TSLA go up and down completely randomly.

Pair Corralation between Direxion Shares and AXS TSLA

Given the investment horizon of 90 days Direxion Shares ETF is expected to under-perform the AXS TSLA. In addition to that, Direxion Shares is 1.02 times more volatile than AXS TSLA Bear. It trades about -0.03 of its total potential returns per unit of risk. AXS TSLA Bear is currently generating about 0.02 per unit of volatility. If you would invest  4,408  in AXS TSLA Bear on November 27, 2024 and sell it today you would lose (266.00) from holding AXS TSLA Bear or give up 6.03% of portfolio value over 90 days.

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

Direxion Shares ETF  vs.  AXS TSLA Bear

Direxion Shares ETF

Risk-Adjusted Performance

Weak

Over the last 90 days Direxion Shares ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

AXS TSLA Bear

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Direxion Shares and AXS TSLA

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

The idea behind Direxion Shares ETF and AXS TSLA Bear 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.