Correlation Between International Investors and Direxion Monthly

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

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

Diversification Opportunities for International Investors and Direxion Monthly

0.29

Correlation Coefficient

International Investors  Direxion Monthly

Modest diversification

The 3 months correlation between INTERNATIONAL and Direxion is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Direxion Monthly Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly and International Investors 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 International Investors Gold are associated (or correlated) with Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly has no effect on the direction of International Investors i.e., International Investors and Direxion Monthly go up and down completely randomly.

Pair Corralation between International Investors and Direxion Monthly

Assuming the 90 days horizon International Investors is expected to generate 2.23 times less return on investment than Direxion Monthly. In addition to that, International Investors is 1.4 times more volatile than Direxion Monthly Sp. It trades about 0.06 of its total potential returns per unit of risk. Direxion Monthly Sp is currently generating about 0.17 per unit of volatility. If you would invest  6,643  in Direxion Monthly Sp on August 31, 2024 and sell it today you would earn a total of  939.00  from holding Direxion Monthly Sp or generate 14.14% return on investment over 90 days.

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

International Investors Gold  vs.  Direxion Monthly Sp

International Investors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, International Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Direxion Monthly

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Monthly Sp are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Direxion Monthly showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Investors and Direxion Monthly

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

The idea behind International Investors Gold and Direxion Monthly Sp 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.