Correlation Between MicroSectorsTM Oil and Direxion Daily
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and Direxion Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and Direxion Daily Technology, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and Direxion Daily.
Diversification Opportunities for MicroSectorsTM Oil and Direxion Daily
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectorsTM and Direxion is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and Direxion Daily Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Technology and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 Technology has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and Direxion Daily go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and Direxion Daily
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to generate 0.84 times more return on investment than Direxion Daily. However, MicroSectorsTM Oil Gas is 1.19 times less risky than Direxion Daily. It trades about -0.08 of its potential returns per unit of risk. Direxion Daily Technology is currently generating about -0.28 per unit of risk. If you would invest 1,505 in MicroSectorsTM Oil Gas on January 20, 2024 and sell it today you would lose (70.00) from holding MicroSectorsTM Oil Gas or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. Direxion Daily Technology
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| Direxion Daily Technology |
MicroSectorsTM Oil and Direxion Daily Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and Direxion Daily
The main advantage of trading using opposite MicroSectorsTM Oil and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.| MicroSectorsTM Oil vs. ProShares Ultra SP500 | MicroSectorsTM Oil vs. HUMANA INC | MicroSectorsTM Oil vs. Aquagold International | MicroSectorsTM Oil vs. Thrivent High Yield |
| Direxion Daily vs. Direxion Daily Semiconductor | Direxion Daily vs. Direxion Daily SP500 | Direxion Daily vs. Direxion Daily Technology | Direxion Daily vs. Direxion Daily SP |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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