Correlation Between Direxion Daily and Infineon Technologies
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Infineon Technologies 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 Infineon Technologies 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 Infineon Technologies AG, you can compare the effects of market volatilities on Direxion Daily and Infineon Technologies 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 Infineon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Infineon Technologies.
Diversification Opportunities for Direxion Daily and Infineon Technologies
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Direxion and Infineon is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Infineon Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infineon Technologies 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 Infineon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infineon Technologies has no effect on the direction of Direxion Daily i.e., Direxion Daily and Infineon Technologies go up and down completely randomly.
Pair Corralation between Direxion Daily and Infineon Technologies
If you would invest 4,835 in Direxion Daily Mid on September 12, 2024 and sell it today you would earn a total of 1,433 from holding Direxion Daily Mid or generate 29.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 1.59% |
Values | Daily Returns |
Direxion Daily Mid vs. Infineon Technologies AG
Performance |
Timeline |
Direxion Daily Mid |
Infineon Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Direxion Daily and Infineon Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Infineon Technologies
The main advantage of trading using opposite Direxion Daily and Infineon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Infineon Technologies 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 Infineon Technologies will offset losses from the drop in Infineon Technologies' 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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