Correlation Between Direxion Daily and Citigroup
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on Direxion Daily and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Citigroup.
Diversification Opportunities for Direxion Daily and Citigroup
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Direxion and Citigroup is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Direxion Daily i.e., Direxion Daily and Citigroup go up and down completely randomly.
Pair Corralation between Direxion Daily and Citigroup
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 2.11 times more return on investment than Citigroup. However, Direxion Daily is 2.11 times more volatile than Citigroup. It trades about 0.03 of its potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of risk. If you would invest 3,844 in Direxion Daily Mid on January 27, 2024 and sell it today you would earn a total of 871.00 from holding Direxion Daily Mid or generate 22.66% 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. Citigroup
Performance |
Timeline |
Direxion Daily Mid |
Citigroup |
Direxion Daily and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Citigroup
The main advantage of trading using opposite Direxion Daily and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's 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 |
Citigroup vs. Aquagold International | Citigroup vs. Thrivent High Yield | Citigroup vs. Morningstar Unconstrained Allocation | Citigroup vs. Via Renewables |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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