Correlation Between Direxion Hilton and Boston Trust

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

By analyzing existing cross correlation between Direxion Hilton Tactical and Boston Trust Midcap, you can compare the effects of market volatilities on Direxion Hilton and Boston Trust 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 Hilton with a short position of Boston Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Hilton and Boston Trust.

Diversification Opportunities for Direxion Hilton and Boston Trust

0.84

Correlation Coefficient

Direxion Hilton  Boston Trust

Very poor diversification

The 3 months correlation between Direxion and Boston is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Hilton Tactical and Boston Trust Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Trust Midcap and Direxion Hilton 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 Hilton Tactical are associated (or correlated) with Boston Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Trust Midcap has no effect on the direction of Direxion Hilton i.e., Direxion Hilton and Boston Trust go up and down completely randomly.

Pair Corralation between Direxion Hilton and Boston Trust

Assuming the 90 days horizon Direxion Hilton is expected to generate 2.78 times less return on investment than Boston Trust. But when comparing it to its historical volatility, Direxion Hilton Tactical is 2.28 times less risky than Boston Trust. It trades about 0.16 of its potential returns per unit of risk. Boston Trust Midcap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,486  in Boston Trust Midcap on September 3, 2024 and sell it today you would earn a total of  213.00  from holding Boston Trust Midcap or generate 8.57% return on investment over 90 days.

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

Direxion Hilton Tactical  vs.  Boston Trust Midcap

Direxion Hilton Tactical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Hilton Tactical are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Direxion Hilton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Trust Midcap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Trust Midcap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Boston Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Direxion Hilton and Boston Trust

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

The idea behind Direxion Hilton Tactical and Boston Trust Midcap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.