Correlation Between Direxion Daily and Wattanapat Hospital

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

Diversification Opportunities for Direxion Daily and Wattanapat Hospital

0.69

Correlation Coefficient

Direxion Daily  Wattanapat Hospital

Poor diversification

The 3 months correlation between Direxion and Wattanapat is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP500 and Wattanapat Hospital Trang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattanapat Hospital Trang 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 Wattanapat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattanapat Hospital Trang has no effect on the direction of Direxion Daily i.e., Direxion Daily and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Direxion Daily and Wattanapat Hospital

Given the investment horizon of 90 days Direxion Daily is expected to generate 2.36 times less return on investment than Wattanapat Hospital. In addition to that, Direxion Daily is 1.01 times more volatile than Wattanapat Hospital Trang. It trades about 0.04 of its total potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.08 per unit of volatility. If you would invest  284.00  in Wattanapat Hospital Trang on January 25, 2024 and sell it today you would earn a total of  546.00  from holding Wattanapat Hospital Trang or generate 192.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.98%
Values	Daily Returns

Direxion Daily SP500  vs.  Wattanapat Hospital Trang

Direxion Daily SP500

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily SP500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Direxion Daily may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Wattanapat Hospital Trang

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical indicators, Wattanapat Hospital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Wattanapat Hospital

The main advantage of trading using opposite Direxion Daily and Wattanapat Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Wattanapat Hospital 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 Wattanapat Hospital will offset losses from the drop in Wattanapat Hospital's long position.

The idea behind Direxion Daily SP500 and Wattanapat Hospital Trang 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.