Correlation Between Direxion Daily and Barnes
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Barnes 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 Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and Barnes Group, you can compare the effects of market volatilities on Direxion Daily and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Barnes.
Diversification Opportunities for Direxion Daily and Barnes
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Barnes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes 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 Mid are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Direxion Daily i.e., Direxion Daily and Barnes go up and down completely randomly.
Pair Corralation between Direxion Daily and Barnes
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 1.0 times more return on investment than Barnes. However, Direxion Daily Mid is 1.0 times less risky than Barnes. It trades about 0.05 of its potential returns per unit of risk. Barnes Group is currently generating about 0.0 per unit of risk. If you would invest 3,813 in Direxion Daily Mid on January 24, 2024 and sell it today you would earn a total of 803.00 from holding Direxion Daily Mid or generate 21.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Barnes Group
Performance |
| Timeline |
| Direxion Daily Mid |
| Barnes Group |
Direxion Daily and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Barnes
The main advantage of trading using opposite Direxion Daily and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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