Correlation Between IShares Copper and Direxion Daily

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

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

Diversification Opportunities for IShares Copper and Direxion Daily

-0.75

Correlation Coefficient

IShares Copper  Direxion Daily

Pay attention - limited upside

The 3 months correlation between IShares and Direxion is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Copper and 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 IShares Copper 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 iShares Copper and 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 IShares Copper i.e., IShares Copper and Direxion Daily go up and down completely randomly.

Pair Corralation between IShares Copper and Direxion Daily

Given the investment horizon of 90 days iShares Copper and is expected to generate 0.51 times more return on investment than Direxion Daily. However, iShares Copper and is 1.95 times less risky than Direxion Daily. It trades about 0.03 of its potential returns per unit of risk. Direxion Daily Gold is currently generating about 0.01 per unit of risk. If you would invest  2,805  in iShares Copper and on September 12, 2024 and sell it today you would earn a total of  88.00  from holding iShares Copper and or generate 3.14% return on investment over 90 days.

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

iShares Copper and  vs.  Direxion Daily Gold

iShares Copper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Copper and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Copper is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Direxion Daily Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares Copper and Direxion Daily

The main advantage of trading using opposite IShares Copper and Direxion Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Copper 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 iShares Copper and 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.