Correlation Between Direxion Daily and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp, you can compare the effects of market volatilities on Direxion Daily and FVCBankcorp 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 FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and FVCBankcorp.
Diversification Opportunities for Direxion Daily and FVCBankcorp
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Direxion and FVCBankcorp is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp 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 FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of Direxion Daily i.e., Direxion Daily and FVCBankcorp go up and down completely randomly.
Pair Corralation between Direxion Daily and FVCBankcorp
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the FVCBankcorp. But the etf apears to be less risky and, when comparing its historical volatility, Direxion Daily Mid is 1.25 times less risky than FVCBankcorp. The etf trades about -0.26 of its potential returns per unit of risk. The FVCBankcorp is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,195 in FVCBankcorp on January 20, 2024 and sell it today you would lose (132.00) from holding FVCBankcorp or give up 11.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. FVCBankcorp
Performance |
| Timeline |
| Direxion Daily Mid |
| FVCBankcorp |
Direxion Daily and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and FVCBankcorp
The main advantage of trading using opposite Direxion Daily and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp'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 |
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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