Correlation Between Direxion Daily and Golf

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Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Golf 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 Golf 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 Golf Co Group, you can compare the effects of market volatilities on Direxion Daily and Golf 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 Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Golf.

Diversification Opportunities for Direxion Daily and Golf

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Direxion and Golf is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily FTSE and Golf Co Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golf Co Group 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 Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golf Co Group has no effect on the direction of Direxion Daily i.e., Direxion Daily and Golf go up and down completely randomly.

Pair Corralation between Direxion Daily and Golf

Given the investment horizon of 90 days Direxion Daily FTSE is expected to generate 0.71 times more return on investment than Golf. However, Direxion Daily FTSE is 1.42 times less risky than Golf. It trades about 0.02 of its potential returns per unit of risk. Golf Co Group is currently generating about -0.02 per unit of risk. If you would invest  2,486  in Direxion Daily FTSE on December 30, 2023 and sell it today you would earn a total of  142.00  from holding Direxion Daily FTSE or generate 5.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy79.15%
ValuesDaily Returns

Direxion Daily FTSE  vs.  Golf Co Group

 Performance 
       Timeline  
Direxion Daily FTSE 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily FTSE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Direxion Daily disclosed solid returns over the last few months and may actually be approaching a breakup point.
Golf Co Group 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Golf Co Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golf sustained solid returns over the last few months and may actually be approaching a breakup point.

Direxion Daily and Golf Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Direxion Daily and Golf

The main advantage of trading using opposite Direxion Daily and Golf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Golf 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 Golf will offset losses from the drop in Golf's long position.
The idea behind Direxion Daily FTSE and Golf Co Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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