Correlation Between Direxion Daily and FUJITSU
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and FUJITSU 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 FUJITSU 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 FUJITSU LTD ADR, you can compare the effects of market volatilities on Direxion Daily and FUJITSU 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 FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and FUJITSU.
Diversification Opportunities for Direxion Daily and FUJITSU
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Direxion and FUJITSU is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR 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 FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of Direxion Daily i.e., Direxion Daily and FUJITSU go up and down completely randomly.
Pair Corralation between Direxion Daily and FUJITSU
Given the investment horizon of 90 days Direxion Daily is expected to generate 1.62 times less return on investment than FUJITSU. In addition to that, Direxion Daily is 1.46 times more volatile than FUJITSU LTD ADR. It trades about 0.07 of its total potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.16 per unit of volatility. If you would invest 1,660 in FUJITSU LTD ADR on September 7, 2024 and sell it today you would earn a total of 100.00 from holding FUJITSU LTD ADR or generate 6.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
Direxion Daily Mid vs. FUJITSU LTD ADR
Performance |
Timeline |
Direxion Daily Mid |
FUJITSU LTD ADR |
Direxion Daily and FUJITSU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and FUJITSU
The main advantage of trading using opposite Direxion Daily and FUJITSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, FUJITSU 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 FUJITSU will offset losses from the drop in FUJITSU's long position.Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
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Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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