Correlation Between Direxion Daily and AXS TSLA

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and AXS TSLA 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 AXS TSLA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily SP and AXS TSLA Bear, you can compare the effects of market volatilities on Direxion Daily and AXS TSLA 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 AXS TSLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and AXS TSLA.

Diversification Opportunities for Direxion Daily and AXS TSLA

0.75

Correlation Coefficient

Direxion Daily  AXS TSLA

Poor diversification

The 3 months correlation between Direxion and AXS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily SP and AXS TSLA Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS TSLA Bear 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 SP are associated (or correlated) with AXS TSLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS TSLA Bear has no effect on the direction of Direxion Daily i.e., Direxion Daily and AXS TSLA go up and down completely randomly.

Pair Corralation between Direxion Daily and AXS TSLA

Given the investment horizon of 90 days Direxion Daily SP is expected to generate 0.2 times more return on investment than AXS TSLA. However, Direxion Daily SP is 5.01 times less risky than AXS TSLA. It trades about -0.04 of its potential returns per unit of risk. AXS TSLA Bear is currently generating about -0.33 per unit of risk. If you would invest  637.00  in Direxion Daily SP on August 23, 2024 and sell it today you would lose (19.00) from holding Direxion Daily SP or give up 2.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Direxion Daily SP  vs.  AXS TSLA Bear

Direxion Daily SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direxion Daily SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

AXS TSLA Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXS TSLA Bear has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Etf's essential indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with Direxion Daily and AXS TSLA

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

The idea behind Direxion Daily SP and AXS TSLA Bear 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.