Correlation Between Direxion Daily and Alimak Hek

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

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

Diversification Opportunities for Direxion Daily and Alimak Hek

0.67

Correlation Coefficient

Direxion Daily  Alimak Hek

Poor diversification

The 3 months correlation between Direxion and Alimak is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Alimak Hek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimak Hek Group 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 Mid are associated (or correlated) with Alimak Hek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimak Hek Group has no effect on the direction of Direxion Daily i.e., Direxion Daily and Alimak Hek go up and down completely randomly.

Pair Corralation between Direxion Daily and Alimak Hek

Given the investment horizon of 90 days Direxion Daily is expected to generate 1.06 times less return on investment than Alimak Hek. In addition to that, Direxion Daily is 1.64 times more volatile than Alimak Hek Group. It trades about 0.05 of its total potential returns per unit of risk. Alimak Hek Group is currently generating about 0.09 per unit of volatility. If you would invest  5,525  in Alimak Hek Group on September 4, 2024 and sell it today you would earn a total of  6,455  from holding Alimak Hek Group or generate 116.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.4%
Values	Daily Returns

Direxion Daily Mid  vs.  Alimak Hek Group

Direxion Daily Mid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Direxion Daily Mid are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, Direxion Daily unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alimak Hek Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direxion Daily and Alimak Hek

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

The idea behind Direxion Daily Mid and Alimak Hek Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.