Correlation Between Direxion Daily and Genpact
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Genpact 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 Genpact 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 Genpact Limited, you can compare the effects of market volatilities on Direxion Daily and Genpact 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 Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Genpact.
Diversification Opportunities for Direxion Daily and Genpact
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Genpact is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Direxion Daily i.e., Direxion Daily and Genpact go up and down completely randomly.
Pair Corralation between Direxion Daily and Genpact
Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 1.63 times more return on investment than Genpact. However, Direxion Daily is 1.63 times more volatile than Genpact Limited. It trades about 0.01 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.05 per unit of risk. If you would invest 2,357 in Direxion Daily FTSE on January 24, 2024 and sell it today you would lose (64.00) from holding Direxion Daily FTSE or give up 2.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily FTSE vs. Genpact Limited
Performance |
| Timeline |
| Direxion Daily FTSE |
| Genpact Limited |
Direxion Daily and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Genpact
The main advantage of trading using opposite Direxion Daily and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact'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 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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