Correlation Between Direxion Daily and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Angel Oak 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 Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily FTSE and Angel Oak Flexible, you can compare the effects of market volatilities on Direxion Daily and Angel Oak 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 Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Angel Oak.
Diversification Opportunities for Direxion Daily and Angel Oak
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Direxion and Angel is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Angel Oak Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Flexible 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 FTSE are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Flexible has no effect on the direction of Direxion Daily i.e., Direxion Daily and Angel Oak go up and down completely randomly.
Pair Corralation between Direxion Daily and Angel Oak
Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 13.59 times more return on investment than Angel Oak. However, Direxion Daily is 13.59 times more volatile than Angel Oak Flexible. It trades about 0.03 of its potential returns per unit of risk. Angel Oak Flexible is currently generating about 0.15 per unit of risk. If you would invest 2,042 in Direxion Daily FTSE on January 19, 2024 and sell it today you would earn a total of 247.00 from holding Direxion Daily FTSE or generate 12.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily FTSE vs. Angel Oak Flexible
Performance |
Timeline |
Direxion Daily FTSE |
Angel Oak Flexible |
Direxion Daily and Angel Oak Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Angel Oak
The main advantage of trading using opposite Direxion Daily and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak's long position.Direxion Daily vs. Direxion Daily South | Direxion Daily vs. Direxion Daily Mid | Direxion Daily vs. Direxion Daily MSCI | Direxion Daily vs. Direxion Daily MSCI |
Angel Oak vs. Vanguard Short Term Investment Grade | Angel Oak vs. HUMANA INC | Angel Oak vs. Aquagold International | Angel Oak vs. Thrivent High Yield |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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