Correlation Between Direxion Daily and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Lord Abbett 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 Lord Abbett 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 Lord Abbett Diversified, you can compare the effects of market volatilities on Direxion Daily and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Lord Abbett.
Diversification Opportunities for Direxion Daily and Lord Abbett
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Lord is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Lord Abbett Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Diversified 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Diversified has no effect on the direction of Direxion Daily i.e., Direxion Daily and Lord Abbett go up and down completely randomly.
Pair Corralation between Direxion Daily and Lord Abbett
Given the investment horizon of 90 days Direxion Daily Mid is expected to under-perform the Lord Abbett. In addition to that, Direxion Daily is 8.57 times more volatile than Lord Abbett Diversified. It trades about -0.03 of its total potential returns per unit of risk. Lord Abbett Diversified is currently generating about 0.03 per unit of volatility. If you would invest 1,633 in Lord Abbett Diversified on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Lord Abbett Diversified or generate 0.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Direxion Daily Mid vs. Lord Abbett Diversified
Performance |
Timeline |
Direxion Daily Mid |
Lord Abbett Diversified |
Direxion Daily and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Direxion Daily and Lord Abbett
The main advantage of trading using opposite Direxion Daily and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett'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 |
Lord Abbett vs. Putnam Money Market | Lord Abbett vs. Blackrock Exchange Portfolio | Lord Abbett vs. Ubs Money Series | Lord Abbett vs. Money Market Obligations |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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