Correlation Between Direxion Daily and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Deutsche Telekom 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 Deutsche Telekom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily SP500 and Deutsche Telekom AG, you can compare the effects of market volatilities on Direxion Daily and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Deutsche Telekom.
Diversification Opportunities for Direxion Daily and Deutsche Telekom
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direxion and Deutsche is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP500 and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 SP500 are associated (or correlated) with Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of Direxion Daily i.e., Direxion Daily and Deutsche Telekom go up and down completely randomly.
Pair Corralation between Direxion Daily and Deutsche Telekom
If you would invest 12,243 in Direxion Daily SP500 on December 29, 2023 and sell it today you would earn a total of 1,165 from holding Direxion Daily SP500 or generate 9.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 4.55% |
Values | Daily Returns |
Direxion Daily SP500 vs. Deutsche Telekom AG
Performance |
Timeline |
Direxion Daily SP500 |
Deutsche Telekom |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Direxion Daily and Deutsche Telekom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Deutsche Telekom
The main advantage of trading using opposite Direxion Daily and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom's long position.Direxion Daily vs. Northern Lights | Direxion Daily vs. Dimensional International High | Direxion Daily vs. First Trust Exchange Traded | Direxion Daily vs. EA Series Trust |
Deutsche Telekom vs. OUTSOURCING INC | Deutsche Telekom vs. Compugroup Medical SE | Deutsche Telekom vs. EIDESVIK OFFSHORE NK | Deutsche Telekom vs. CVR Medical Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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