Correlation Between Fidelity MSCI and Direxion Daily

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

By analyzing existing cross correlation between Fidelity MSCI Materials and Direxion Daily Gold, you can compare the effects of market volatilities on Fidelity MSCI and Direxion Daily 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 Fidelity MSCI with a short position of Direxion Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Direxion Daily.

Diversification Opportunities for Fidelity MSCI and Direxion Daily

-0.41

Correlation Coefficient

Fidelity MSCI  Direxion Daily

Very good diversification

The 3 months correlation between Fidelity and Direxion is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Materials and Direxion Daily Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Daily Gold and Fidelity MSCI 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 Fidelity MSCI Materials are associated (or correlated) with Direxion Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Daily Gold has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Direxion Daily go up and down completely randomly.

Pair Corralation between Fidelity MSCI and Direxion Daily

Given the investment horizon of 90 days Fidelity MSCI is expected to generate 14.18 times less return on investment than Direxion Daily. But when comparing it to its historical volatility, Fidelity MSCI Materials is 4.75 times less risky than Direxion Daily. It trades about 0.01 of its potential returns per unit of risk. Direxion Daily Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,334  in Direxion Daily Gold on September 13, 2024 and sell it today you would earn a total of  25.00  from holding Direxion Daily Gold or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fidelity MSCI Materials  vs.  Direxion Daily Gold

Fidelity MSCI Materials

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fidelity MSCI Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Direxion Daily Gold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Direxion Daily is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fidelity MSCI and Direxion Daily

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

The idea behind Fidelity MSCI Materials and Direxion Daily Gold 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.